Value Investor Insight sat down with Damon Ficklin and Jeff Mueller, who manage the Polen Global Growth strategy. They outline the philosophy guiding their investment decisions, shed light on key industry trends, and drill into the fundamental drivers of their conviction in the companies they hold.
- Damon and Jeff describe their belief that company earnings growth drives shareholder returns over time. They explain how Polen Capital’s longstanding investment guardrails help them narrow a universe of 3,000 businesses globally with $10 billion or more in market capitalization to a much smaller pool of companies they think are truly competitively advantaged.
- In 2022, the equity market has proved challenging for growth investors. Damon points out that while his team can’t control how the market rates long-duration assets, what they can control is their selection of what their research indicates are outstanding businesses – companies that do a great job for their customers, partners, employees, and shareholders.
- Damon and Jeff cite examples from their portfolio of companies they view as beneficiaries of long-term, secular trends. Others exhibit defensive characteristics in that they operate in categories historically resistant to recessions.
- Jeff closes with a reflection on how the consistent, disciplined execution of their strategy often goes against human nature, with its common desire to go after the next “shiny object.” He says it’s simple in theory – but not easy in practice – to have the patience to allow underlying earnings to compound over long periods.
We’re looking for consistent & persistent earnings growth through cycles. We concentrate the portfolio heavily in technology & health care, where we feel we find the highest quality.
—Jeff Mueller, Portfolio Manager & Analyst, Large Company Growth
Return on Equity (ROE): a measure of a company’s net income divided by its shareholders’ equity
Return on Invested Capital (ROIC): assesses a company’s efficiency at allocating the capital and is measured by operating profit after taxes divided by investment capital
The information provided is for informational purposes only. Opinions and views expressed constitute the judgment of Polen Capital as of September 30,2022, may involve a number of assumptions and estimates which are not guaranteed, and are subject to change without notice. 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. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations. This document does not identify all the risks (direct or indirect) or other considerations which might be material when entering any financial transaction.