Video Transcript
James Golan, Portfolio Manager, U.S. Growth and Core Equity Team: William Blair has been quality growth investors now for many decades. But in the large-cap space, we have what we call our structurally advantaged framework. So the way we approach large-cap growth investing is it’s really a research-intensive approach, where we’re trying to identify mispricings or inefficiencies in the large-cap growth marketplace. The end result of that is finding companies where the stock price is mispriced relative to its long-term earnings growth power and the durability of that growth.
Nancy Aversa, Research Analyst, U.S. Growth and Core Equity Team: My primary focus is looking at the outlook or the opportunity for a company over the next three to five years and identifying the characteristics of the business that we find compelling both from an industry perspective as well as company-specific opportunities. And that sets us up for success in terms of identifying companies that are going to have compelling long-term growth opportunities.
Why is your focus on structurally advantaged companies important to the success of the strategy?
James Golan: It really boils down to the fact that we are giving our analysts a very narrow pool to look at in terms of companies that they’re analyzing for potential investment ideas for the portfolio. So when you take a step back, we have a universe of well over 800 companies that we can potentially invest in. And through this framework that we have in place, we really narrow that down in terms of companies that have great industry characteristics and strong company-specific characteristics. So the advantage of this structurally advantaged framework is our analysts aren’t out there chasing shiny objects. It’s very focused, very narrow, focusing on the very best companies and the best industries for our portfolio.
How do you try to neutralize unintended risks?
James Golan: So sector and market-cap neutrality is an important risk-management tool that we use for our portfolio. Our goal is to have sector and market-cap neutrality. And the reason why we do this is we believe it lessens the overall volatility of the portfolio—provides a smoother ride for our client’s portfolio over time.
What do you like about large-cap growth investing?
James Golan: It’s incredibly intellectually stimulating and rewarding. Going out and finding a great stock, a diamond in the rough, is incredibly rewarding on an intellectual basis, but also very rewarding for our clients.
Nancy Aversa: My favorite part about large-cap growth is that it’s a little bit like finding a needle in a haystack. These companies are large. They’re well understood by the market. And so the idea is to try to identify the underlying characteristics of the business, but trying to sort of tease out something unique or underappreciated by the overall market.
As you look forward, industries may present compelling opportunities?
Nancy Aversa: I would say there’s a number of consumer trends that I think are relevant not only in the U.S. but globally, the first one being health and wellness. We see dynamics in athletic apparel or sportswear, as well as even in beauty and healthcare. We also see opportunities as it relates to travel and other experiences. I think especially post-pandemic, consumers are looking for opportunities to really get out of the house and have experiences rather than necessarily only spending on durable goods.
What is your edge in large-cap growth investing?
James Golan: This might actually sound trite, but it really comes down to our people. You know, everyone says people make the difference, but in our case, it really does. David Ricci and I, the other co-manager of the strategy, really sat down many years ago and were very thoughtful in terms of how we structured the large-cap growth team. And we decided that it was not going to be a command-and-control structure, where you might see this in other places where the PMs are telling the analysts what to work on. We give the analysts the freedom, the flexibility, to go out there and find great ideas for the portfolio.
Disclosure
The views and opinions expressed herein are those of the speakers as of the date of publication, are subject to change without notice as economic and market conditions dictate, and may not reflect the views and opinions of other investment teams within William Blair. Factual information has been obtained from sources we believe to be reliable, but its accuracy, completeness, or interpretation cannot be guaranteed. This material may include estimates, outlooks, projections, and other forward-looking statements. Due to a variety of factors, actual events may differ significantly from those presented. This video has been provided for informational purposes only and should not be considered as investment advice or a recommendation of any particular strategy or investment product, or as an offer to buy or sell any securities or related financial instruments in any jurisdiction. Investment advice and recommendations can be provided only after careful consideration of an investor’s objectives, guidelines, and restrictions.
Investing involves risks, including the possible loss of principal. Equity securities may decline in value due to both real and perceived general market, economic, and industry conditions. Different investment styles may shift in and out of favor depending on market conditions. Individual securities may not perform as expected or a strategy used by the Adviser may fail to produce its intended result. To the extent that investments are concentrated amongst a small number of issuers, the strategy may be more susceptible to adverse developments affecting any single issuer. Diversification does not ensure against loss. There can be no assurance that investment objectives will be met. Any investment or strategy mentioned herein may not be appropriate for every investor. Past performance is not indicative of future results.