TIP723: The Art of Buying Growth Companies for Value Prices w/ Jim Zimmerman and Abigail Zimmerman

We Study Billionaires - The Investor’s Podcast Network

Stig Brodersen

Education, Investing, Business

4.6 • 3.6K Ratings

🗓️ 23 May 2025

⏱️ 75 minutes

🔗️ Recording | iTunes | RSS

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Summary

On today’s episode, Kyle Grieve chats with James and Abigail Zimmerman about the strength of growing and sustainable cash flowing businesses; the importance of strong balance sheets; how they navigate their circle of competence, and the steps they take to expand it; why simplicity is so important in an age of complexity, how they use cash as a boost, and not a drag on returns, and much more. IN THIS EPISODE YOU’LL LEARN: 00:00 - Intro 02:28 - How communities—public and private—can spark better investment ideas. 07:06 - Why free cash flow yield is their north star metric. 10:09 - How to tell if value drivers are simple or deceptively complex. 14:00 - Why staying inside your circle of competence protects your downside. 19:22 - How “Fort Knox” balance sheets help survive any market storm. 28:23 - Key signals that suggest a business can sustain high ROIC. 32:56 - What truly shows management is aligned, not just insider ownership. 43:25 - The hidden risks that make many retailers dangerous investments. 53:07 - How an equity-bond lens helps compare all asset classes. 01:06:39 - When to double down on winners. And so much more! Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join Clay and a select group of passionate value investors for a retreat in Big Sky, Montana. Learn more ⁠⁠⁠⁠here⁠⁠⁠⁠. Join the exclusive ⁠⁠⁠⁠TIP Mastermind Community⁠⁠⁠⁠ to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members. Read about The Magic Formula here. Check out Value Investors Club here. Check out SumZero here. Check out MOI Global here. Follow Kyle on ⁠⁠X⁠⁠ and ⁠⁠LinkedIn⁠⁠. Check out all the books mentioned and discussed in our podcast episodes ⁠⁠⁠⁠here⁠⁠⁠⁠. Enjoy ad-free episodes when you subscribe to our ⁠⁠⁠⁠Premium Feed⁠⁠⁠⁠. NEW TO THE SHOW? Get smarter about valuing businesses in just a few minutes each week through our newsletter, ⁠⁠⁠⁠The Intrinsic Value Newsletter⁠⁠⁠⁠. Check out our ⁠⁠⁠⁠We Study Billionaires Starter Packs⁠⁠⁠⁠. Follow our official social media accounts: ⁠⁠⁠⁠X (Twitter)⁠⁠⁠⁠ | ⁠⁠⁠⁠LinkedIn⁠⁠⁠⁠ | ⁠⁠⁠⁠Instagram⁠⁠⁠⁠ | ⁠⁠⁠⁠Facebook⁠⁠⁠⁠ | ⁠⁠⁠⁠TikTok⁠⁠⁠⁠. Browse through all our episodes (complete with transcripts) ⁠⁠⁠⁠here⁠⁠⁠⁠. Try our tool for picking stock winners and managing our portfolios: ⁠⁠⁠⁠TIP Finance Tool⁠⁠⁠⁠. Enjoy exclusive perks from our ⁠⁠⁠⁠favorite Apps and Services⁠⁠⁠⁠. Learn how to better start, manage, and grow your business with the ⁠⁠⁠⁠best business podcasts⁠⁠⁠⁠. SPONSORS Support our free podcast by supporting our ⁠⁠⁠⁠sponsors⁠⁠⁠⁠: SimpleMining Hardblock AnchorWatch Unchained Fundrise DeleteMe CFI Education The Bitcoin Way Vanta Onramp Indeed Shopify HELP US OUT! Help us reach new listeners by leaving us a ⁠⁠⁠⁠rating and review⁠⁠⁠⁠ on ⁠⁠⁠⁠Spotify⁠⁠⁠⁠! 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://premium.theinvestorspodcast.com/ 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.
0:03.0	Today's guests have outperformed the S&P 500 for most of the last 19 years, all while holding a 20% cash position on average.
0:10.0	Let that sink in for a minute. Outperformance and a hefty cash cushion? That's incredibly rare.
0:16.0	The father and daughter duo, James and Abby Zimmerman of Lowell Capital, have an investing strategy
0:21.4	based on a simple but powerful idea, which is to focus on resilient and cash-generating
0:26.3	businesses that they understand deeply. This means they actively search for companies
0:30.5	that have cash flow today, not tomorrow. They want businesses as close to the center of their
0:35.3	circle of competence as possible. They're looking for overlooked businesses with Fort Knox balance sheets, which require
0:41.3	minimal capital to maintain operations, all while factoring in growth.
0:46.3	We'll explore their investing journey, starting with where they source ideas from popular
0:50.3	investment idea factories such as the Balli Investors Club.
0:53.3	We'll examine how they use the equity bond
0:55.2	framework to aid in their decision making. We'll discuss their approach to keeping things simple,
1:00.0	how they say disciplined around portfolio construction, and some non-obvious signals that management
1:05.0	is aligned with shareholders. One of my favorite topics was how they navigate the delicate
1:09.8	balance between growth and value.
1:12.5	While many investors put themselves firmly in one camp, they've managed to play both sides
1:16.4	of the pendulum in a very value, a creative way.
1:19.8	And their ideas just simply work.
1:21.9	I recently came upon a tweet that showed the 30 best performing stocks in Canada over
1:26.2	the last three years.
1:31.1	And I was very impressed to see that Lowell Capital invested in three of them.
	...

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