Far From The Finishing Post Troy Asset Management

Katie Potts founded Herald Investment Management and has managed the Herald Investment Trust since 1994, generating strong returns by investing in smaller companies across the telecom, multimedia and technology sectors.  We discuss Katie's evolution as an investor, the differences between the UK and US markets, and the importance of being a patient and long-term provider of primary capital.  We also explore the benefits of meeting lots of companies and running winners in a diversified portfolio.

Show notes:
[1:13] Katie discusses founding Herald and how she came to focus on smaller companies
[2:55] The importance of having the right structure
[4:06] Katie’s evolution as an investor
[6:51] How technology has changed and the benefits of renting processing power
[10:48] Differences between the UK and US market
[12:10] A shortage of long-term capital in the UK
[15:10] The current investment environment
[18:33] Common investment pitfalls
[19:39] Risk management
[20:35] Running winners whilst spreading your bets
[22:04] The benefits of meeting a lot of companies
[24:45] Accounting for stock based compensation
[25:49] Diverging from the script and taking a long term view
[26:53] Judging the quality of people
[28:06] Being a provider of primary capital and the advantages of small cap companies over larger ones
[30:09] The importance of patience
[30:59] Avoiding the most popular IPOs
[32:33] There are always winners and losers in the tech sector
[33:06] The big trends over the next decade
[34:00]  Be interested and enjoy it

Charlotte Yonge manages the Trojan Ethical Fund and is assistant fund manager of the Trojan Fund and Personal Assets Trust.  We discuss the risks of higher inflation and ways to preserve and grow the real value of investors' capital.  We also explore ESG in a multi-asset context, and why Charlotte co-founded Girls Are INvestors (GAIN).

Show notes:
[0:59] Charlotte talks about how she got into the industry
[2:39] Recognising that emotions play an important role in investing
[4:34] Catching the investing bug 
[6:01] Inflationary risks are growing
[9:13] Balancing inflationary and disinflationary forces
[11:41] Are higher prices the cure for higher prices?
[13:49] The Fed is reactive rather than proactive
[14:46] Protecting against a broad range of potential inflationary outcomes
[17:35] The role of cash in an inflationary world
[20:08] Index-linked bonds
[22:22] The importance of common values
[25:30] How the portfolio has evolved
[28:07] Spaghetti mapping with Dr Pepper
[30:28] Payment networks
[33:39] ESG in a multi-asset context
[37:52] Engaging for positive change
[40:03] Girls Are INvestors (GAIN)
[44:18] Back yourself

Nick Train founded Lindsell Train, alongside Michael Lindsell, in 2000 and has generated outstanding returns by investing in a concentrated portfolio of exceptional companies.  In a rich and varied discussion, Nick talks about the power of optimism, the rewards of being patient, and the value of semi-eternal brands in a rapidly changing world.

Show notes:
[1:13] Nick talks about how he got into the investment profession
[3:48] GT Management
[6:18] Learning from Warren Buffett and Alex Dundas
[9:17] Investing in consumer brands
[11:02] The power of being an optimist
[14:49] Avoiding losing strategies
[16:15] The benefits of being a boutique
[17:59] The importance of having the support of like-minded people
[19:06] The power of patience
[21:42] Being a hoarder of valuable things
[24:20] Hanging on to losers as well as winners
[25:52] Investors’ perception of management is influenced by share prices
[28:04] Investing in outstanding businesses when they are cheap
[29:15] The rewards for corporate success are structurally higher in the 21st century
[31:31] Investing in technology proxies
[34:23] Digital permits higher cash flow returns on capital
[36:24] The value of semi-eternal brands in a rapidly changing world
[38:57] Owning defensive and diversified staples companies
[41:37] Unilever’s adaptability
[42:44] Do yoga

Ashish Swarup is an experienced emerging market investor and the founder of Aikya, a boutique focused on high-quality and durable companies managed by competent and trustworthy people.  Ashish discusses some of the pitfalls of investing in emerging markets and why aligning oneself with trusted stewards, who have 'soul in the game', is a winning strategy for long-term investors.

Show notes:

[1:02] Ashish talks about his career so far
[5:11] Keeping things simple
[6:26] Common pitfalls for emerging market investors
[9:15] Needing a different toolkit
[10:33] The importance of having a stable temperament
[11:50] Investing with quality people 
[13:46] Having soul in the game
[15:08] Appreciating the nuances associated with family ownership
[16:41] The advantage of having a deep network of local contacts
[19:20] Building lasting relationships with local contacts
[21:22] Investing in companies with a clear purpose and good governance
[24:14] Chinese education companies
[27:00] Governance standards are not improving
[27:27] Purposefully having a narrow investment universe
[28:23] Constantly questioning your assumptions
[29:55] India and China
[33:05] Competitive intensity and investing in companies that build trust in China
[34:22] The role of valuation
[35:29] Backing predictable businesses with a strong right to win
[37:18] The rise of local consumer staples companies
[40:14] Aikya and ESG
[43:14] The investment structure matters

James Harries has a wealth of experience as a global income investor and manages the Trojan Global Income Fund and Securities Trust of Scotland.  James talks about his journey from Royal Military Academy Sandhurst to a career in investing, how he has evolved as an investor and why income investing remains highly relevant in today's world.

Show notes:

[1:05] James talks about the start of his career and the lessons learnt at Sandhurst
[5:23] Being disciplined and allowing good habits to compound
[6:41] The importance of income investing
[9:47] Focusing on generating good returns whilst limiting drawdowns and volatility
[11:08] The income discipline 
[13:08] Balancing quality, income and growth
[15:16] The progression to a more concentrated, lower turnover and higher quality-focused portfolio
[16:14] Emphasising quality above dividend yield
[18:11] Insulating the portfolio and benefiting from technological change
[21:37] How the deployment of technology is benefiting a broad range of companies in the portfolio.
[24:14] The tobacco industry's evolution
[27:58] Incorporating ESG considerations
[29:04] Focusing on deeper and longer-term issues to gain an edge
[31:53] Domino's Pizza
[34:49] Structuring the portfolio for resilience
[38:29] The macro backdrop
[42:28] Do something you enjoy, concentrate on what matters and be happy

Sanjay Ayer is a portfolio manager at WCM Investment Management, a California-based asset manager investing in good quality companies with strong cultures and improving competitive moats.  Sanjay talks about his evolution as an investor, how a good culture can reinforce a company's competitive advantage, and why it is so important for investors to learn from mistakes and compound knowledge to sustain success.

Show notes:

[1:15] Sanjay talks about his early career and moving from Morningstar to WCM
[4:10] Why one should focus on companies that are expanding their competitive moat
[6:46] Testing the trajectory of a moat
[9:11] Amazon and Shopify
[10:55] Compounding knowledge to sustain success
[14:27] Learning from mistakes
[16:26] Niche industrial and influencer typologies
[20:00] The importance of culture
[21:13] Cultural optionality and culture as a durable competitive advantage
[25:23] Balancing centralisation and decentralisation in regulated industries
[27:21] Cultural trajectory
[29:12] Portfolio construction as a foundation for rational decision-making
[32:19] The role of valuation
[34:42] R&D to sustain an investors' competitive advantages
[38:41] Persistent inefficiencies in the investment profession
[42:30] Using growth and scale to advance culture
[44:51] Embrace cognitive dissonance and consider return on time