Don't Underestimate the Power of 'Hidden Compounders'

Stansberry Investor Hour

Stansberry Research

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4.4 • 677 Ratings

🗓️ 1 April 2025

⏱️ 65 minutes

🔗️ Recording | iTunes | RSS

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Summary

On this week's Stansberry Investor Hour, Dan and Corey are joined by John Barr. John is a managing director at Needham Funds, where he has served as co-portfolio manager of the Needham Growth Fund and portfolio manager of the Needham Aggressive Growth Fund for 15 years.

John kicks things off by discussing his investment philosophy, what Needham Funds does, and the power of compounding. He says he tries to find companies that are hidden compounders that will eventually turn into quality compounders. This leads John to share the four criteria he looks for when trying to find hidden compounders. He names two such companies that fit the criteria, breaking down the thought process for Needham's investing in each one. (1:39)

Next, John explains why he's such a fan of family-run businesses and names a power-conversion company he likes that's still being led by its founder. He then discusses what sets Needham apart from other funds, including its preference to hold on to quality companies for a long time – even through 50% drawdowns. And John details how he decides when to actually sell a company, although he notes that he made a mistake with Dick's Sporting Goods. (21:31)

Finally, John reminds investors to know and play to their strengths. And he urges them to ignore all the noise in the news, as being successful in the markets requires a fair amount of optimism about the future. Talking broadly, John says that Needham has been investing in infrastructure for the past decade-plus and more recently has been looking at defense companies. He names military shipbuilder Huntington Ingalls Industries as a solid pick today. Plus, he names a couple skilled-labor-school stocks he likes, as skilled labor is set to remain in high demand. (40:58)

Transcript

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0:00.0	Hello and welcome to the Stansbury Investor Hour. I'm Dan Ferris. I'm the editor of Extreme Value and the Ferris Report, both published by Stansberry Research.
0:10.0	And I'm Corey McLaughlin, editor of the Stansberry Daily Digest. Today we talk with John Barr of need of funds.
0:16.0	John is a long-term bottom-up investor looking for great high-quality companies before they become high-quality companies.
0:25.6	It's something I know you'll be very interested to hear about.
0:29.6	Let's talk with John Barr. Let's do it right now.
0:36.6	For the last 25 years, Dan Ferris has predicted nearly every financial and political crisis in America, including the collapse of Lehman Brothers in 2008 and the peak of the NASDAQ in 2021.
0:51.3	Now he has a new major announcement about a crisis that could soon threaten the U.S. economy
0:55.9	and can soon bankrupt millions of citizens. As he puts it, there is something happening in this
1:01.4	country, something much bigger than you may yet realize, and millions are about to be blindsided,
1:06.6	unless they take the right steps now. Find out what's coming and how to protect your portfolio by going to
1:12.2	www. www. American Darkday.com and sign up for this free report. The last time the U.S. economy
1:19.2	looked like this, stocks didn't move for 16 years, and many investors lost 80% of their wealth.
1:25.6	Learn the steps you can take right away to protect and potentially grow your holdings
1:29.4	many times over at www.american darkday.com.
1:38.8	John, welcome to the show.
1:40.5	Thanks for being here.
1:42.4	Dan, great to be back with you. All right. I don't, I think you're a new,
1:49.4	I was looking through the archives and you seem to be a new guest to the show. I like to start
1:56.2	off in a certain way with new guests, and especially someone in your business at Needham.
2:03.3	So the basic question then, John, is if you and I were sitting at a bar and ran into each
2:09.6	other and the subject of investing came up, and I said, oh, what kind of an investor are you?
2:16.4	What would be your answer to that?
	...

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