MI367: How to Invest in the Best of the Best: Quality Investing w/ Shawn O'Malley

The Intrinsic Value Podcast - The Investor’s Podcast Network

The Investor's Podcast Network

Investing, Education, Business

4.6 • 593 Ratings

🗓️ 2 September 2024

⏱️ 51 minutes

🔗️ Recording | iTunes | RSS

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Summary

In today’s episode, Shawn O’Malley (@Shawn_OMalley_) breaks down different investors’ approaches to finding the best of the best companies to own. It’s a strategy known as Quality Investing, and it differs from value investing because quality investors are more focused on finding companies to own forever, as opposed to selling them if they rise above their current intrinsic value. You’ll learn how definitions of quality vary, how quality investing is still rooted in value investing, what the patterns and building blocks of high-quality companies are, why pricing power is a great way to identify quality businesses, how Chuck Akre approaches quality investing, what Jim Collins’ research on enduringly great companies reveals, and how Chris Mayer finds stocks with 100-to-1 returns—plus so much more! IN THIS EPISODE, YOU’LL LEARN 00:00 - Intro 02:15 - How Quality Investing traces back to Ben Graham 03:10 - What quality investing is generally, and how it differ from other strategies 03:32 - What are the patterns and building blocks of quality businesses 07:51 - Why pricing power is so important to quality stocks 12:37 - How Chuck Akre’s three-legged stool approach to quality investing works 22:12 - What Jim Collins’ intensive study of enduringly great companies reveals for investors 29:57 - How Chris Mayer finds stocks that generate 100-to-1 returns 32:46 - How to define and determine whether a company has a winning corporate culture 41:55 - Why quality investing is really an art form And much, much more! *Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Kyle and the other community members. Compounding Quality’s Investing Philosophy. Three-Legged Stool Masterclass. Chris Mayer’s blog Jim Collins' book, Built to Last. Thomas Peters' book, In Search of Excellence. Michael Porter's book, Competitive Advantage. Lawrence Cunningham's book, Quality Investing. Thomas Phelps' book, 100 to 1 in the Stock Market. Jim Collins' book, Good to Great. Chris Mayer's book, 100 Baggers. Long Equity's book, The Intelligent Quality Investor. Check out the books mentioned in the podcast here. Enjoy ad-free episodes when you subscribe to our Premium Feed. NEW TO THE SHOW? Follow our official social media accounts: X (Twitter) | LinkedIn | Instagram | Facebook | TikTok. Check out our Millennial Investing Starter Packs. Browse through all our episodes (complete with transcripts) here. Try Kyle's favorite tool for picking stock winners and managing our portfolios: TIP Finance. Enjoy exclusive perks from our favorite Apps and Services. Stay up-to-date on financial markets and investing strategies through our daily newsletter, We Study Markets. Learn how to better start, manage, and grow your business with the best business podcasts. SPONSORS Support our free podcast by supporting our sponsors: Fiscal.AI Connect with Shawn: Twitter | LinkedIn | Email HELP US OUT! Help us reach new listeners by leaving us a rating and review on Apple Podcasts! It takes less than 30 seconds, and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it! Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

Transcript

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0:00.0	You're listening to TIP.
0:02.7	Hey guys, welcome to the millennial investing podcast. I'm your host, Sean O'Malley.
0:09.0	On today's episode, I'll be going through what it means to be an investor who specializes
0:13.4	in owning only the best of the best companies, which is what some refer to as quality investing,
0:18.6	in contrast with value investing or growth investing.
0:22.4	Quality investors focus on only owning companies for the long term, companies that they can truly
0:26.6	buy and hold forever.
0:28.7	Quality investors want to find the company's position to deliver the best compounded returns,
0:33.4	and they're not necessarily afraid to pay a fair price to own such great businesses.
0:37.3	Whereas value investors may sell a stock if its price exceeds their estimate of intrinsic value,
0:42.2	quality investors are more inclined to continue holding companies even if they temporarily
0:46.1	have expensive valuations.
0:48.1	They're more focused on finding companies that fit their mold of quality, and once they
0:51.9	have, they typically want to hold onto them.
0:54.6	While rare, there are instances of such companies who can generate above average returns
0:59.0	for decades, and there is a blueprint for finding them.
1:02.4	Investors like Chris Mayer and Chuck Ackrey have made a living identifying these types of companies,
1:06.8	while others like Jim Collins have spent years researching what makes some special companies
1:10.9	not only built to last the test of time, but also to outperform the market over long
1:15.7	expanses.
1:16.7	In breaking down the DNA of companies that generate the best long-term returns for investors,
1:21.7	I'll share the wisdom I learned from experts on the topic like Chris Mare, Chuck Ackre,
	...

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