What distinguishes companies that will thrive from those that will perish? In this episode, we explore three traits that mark out the companies set to surge ahead from those more likely to struggle:
1. They solve real-world problems
2. They are financially strong and disciplined
3. They are highly adaptable
Baillie Gifford partner Tim Garratt discusses these characteristics, gives examples of companies that exhibit them and explains why this feels like a once-in-a-generation opportunity to be a long-term growth investor.
Background
Tim Garratt is an investment specialist, overseeing the institutional clients who invest in our Long Term Global Growth strategy and leading our broader client specialist network.
He recently co-authored the paper Why growth, why now?, which reaffirms our beliefs about how growth investing can generate attractive returns.
In this episode of Short Briefings on Long Term Thinking, he discusses how interest rate rises, restricted amounts of capital and geopolitical tensions are causing a stock market shake-out. And he explains why this plays to the advantage of patient investors who focus on the fundamentals when picking growth stocks.
Garratt gives examples of how companies, including Netflix, Roblox, Shopify and Amazon, fulfil the criteria we seek. And he explains how Baillie Gifford itself is adapting to the times, exploring the use of machine learning and other tools to hone our investment process.
Resources:
We’re all climate hypocrites now
Timecodes:
00:00 Introduction
1:30 From abundance to limitation
03:45 Implications for investors
05:20 Real world problems: supply chains
07:30 Deere and hi-tech farming
09:00 Financial strength and discipline
09:50 Netflix and pricing power
12:00 Keeping watch on margins
14:15 China’s electric vehicle makers
16:15 Adaptability and new business models
16:50 Roblox adds AI
19:30 Microsoft, Amazon and environmental costs
21:45 Sea and the importance of culture
23:00 How Baillie Gifford is adapting
25:05 ‘Why now?’ for growth investing
26:55 Book choice
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