Allan Gray The Allan Gray Podcast

36. Needles in a haystack: Finding the compounders that drive long-term equity returns

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Finding long-term compounders can feel a little like searching for a needle in a haystack. While a small number of businesses generate a disproportionate share of long-term equity market returns, identifying them is far more difficult than it appears in hindsight. In this episode of The Allan Gray Podcast, portfolio managers Siphesihle Zwane, Jithen Pillay and Pieter Koornhof discuss how Allan Gray searches for businesses with the potential to compound value over long periods of time. They explore why a great business is not always a great investment, what characteristics underpin enduring businesses, and why some of the best buying opportunities emerge during periods of uncertainty.
Chapters
  • 00:00 Introduction: The search for long-term compounders
  • 03:07 Value investing versus valuation-driven investing
  • 09:00 What makes a business a long-term compounder?
  • 12:57 Businesses we admire but don't currently own
  • 18:22 Moats, competition and the durability of quality
  • 25:05 Can management and culture be a moat?
  • 32:01 AI, disruption and investing for the future
  • 35:14 Different types of compounders
  • 42:22 Temporary wobble or permanent decline?
  • 48:15 When is the right time to sell?
  • 56:20 Why investing in compounders remains difficult
  • 59:08 Key takeaways: Patience, valuation and long-term thinking
15 Jul English South Africa Business · Investing

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