In this episode of Talk Your Book with the Animal Spirits podcast, Rob Forker shares what drives his thinking as lead portfolio manager of the Polen International Small Company Growth strategy. He explains why he believes the international small cap space presents such compelling opportunities and how Polen’s process and philosophy aim to avoid the illusory growth of what he terms “sugar-high” companies in favor of durable, high-quality businesses.
- For U.S. investors, there are relatively few international small-cap stocks that are commonly known. Analyst coverage of these smaller overseas companies is less regular, suggesting the existence of a potentially larger “information edge” opportunity for active managers in this space.
- Forker explains that many impressive smaller technology companies exist outside of Silicon Valley. Polen Capital invests in companies in Europe, Canada, and Japan that we believe are at the forefront of technological shifts. We think the gap between Silicon Valley and the rest of the world is narrowing.
- When it comes to the addressable market for international small cap, Forker describes how the application of Polen’s investment guardrails to screen for the highest-quality companies winnows the universe from 4,300 stocks to approximately 500 prospects for deeper research and analysis.
- There are several business models or technologies that proved successful in the U.S. and are now being carried over to other countries. While adoption curves in international markets may be slightly behind, we believe the same “recipes” have a good chance of winning there, given where their consumers are today.
- Forker emphasizes the importance of understanding cultural factors when investing internationally. In our view, it’s essential to analyze the culture of the consumers and the company itself as it relates to leadership and decision-making.
- At Polen Capital, we focus on consistently applying our investment guardrails and bringing a business owner’s long-term mindset when analyzing foreign companies. Our highly collaborative team process works to put any personal biases or emotions in check to pursue the best outcomes for clients.
We think the margin of safety on all the companies we own is the quality of the business.
—Rob Forker, Portfolio Manager & Analyst
Please note that this document is a condensed summary of the full interview conducted by Animal Spirits.
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