Animal Spirits: Polen Capital’s Approach to International Growth Investing

Todd Morris sheds light on what’s driving international equity markets and where he sees opportunity.

Podcast Highlights 

It has been a while since international stocks have had their day in the sun. Todd Morris, portfolio manager & analyst for Polen’s International Growth strategy, recently sat down with Animal Spirits podcast hosts Michael Batnick and Ben Carlson to discuss how international businesses are faring and where he perceives the most attractive opportunities.

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  • Looking at history, there have been many cycles where U.S. and International stocks have traded performance leadership. Since the Global Financial Crisis, we have seen the U.S. market take off, driven in large part by the technology sector.1 However, this doesn’t mean that non-U.S. markets are devoid of opportunity, or that the U.S. is guaranteed to dominate forever. The valuation of high-quality international businesses is particularly compelling right now, in Todd’s view.
  • Todd explains that at Polen Capital, we are fundamental investors first. We strive for a holistic understanding of each business, pursuing companies that we believe are capable of growing their earnings faster than the market. We are always aware of the macro context, but it is not the primary driver of our decision-making.
  • Higher interest rates impact some companies more than others, and the cost of capital is an important consideration. Polen prizes businesses with financial flexibility and self-generated cash. This makes them less beholden to external capital and, consequently, better equipped to drive consistent growth against a challenging backdrop, according to our research.
  • Todd describes the history of Polen Capital’s equity investment approach and the five guardrails that allow his team to efficiently discard nearly 90% of their international universe to focus deeply on an elite set of companies that meet their high hurdles for quality. The team operates as business analysts who delve into both quantitative and qualitative metrics.
  • The conversation closes with some highlights of specific sectors and companies that Polen’s investment team believes show high potential for growth, including healthcare, technology (both hard tech and software), and pharmaceutical companies with innovative therapies targeting diabetes and obesity. 

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Important Disclosures

1The Global Financial Crisis was a severe worldwide economic crisis. The National Bureau of Economic Research dates the recession around this crisis from Dec-2007 through Jun-2009. 

Please note that this document is a condensed summary of the full interview conducted by Animal Spirits. 

This information is provided for illustrative purposes only. Opinions and views expressed constitute the judgment of Polen Capital as of January 2024 and may involve a number of assumptions and estimates which are not guaranteed and are subject to change without notice or update. Although the information and any opinions or views given have been obtained from or based on sources believed to be reliable, no warranty or representation is made as to their correctness, completeness, or accuracy. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice, including any forward-looking estimates or statements which are based on certain expectations and assumptions. The views and strategies described may not be suitable for all clients. This document does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction. Past performance does not guarantee future results and profitable results cannot be guaranteed.