Should We Still Ride The Inflation Winners? | Summary and Q&A

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March 9, 2023
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Real Vision Daily Briefing
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Should We Still Ride The Inflation Winners?

TL;DR

Portfolio manager James Davolas discusses hard asset investments and a capital light business model as a strategy to navigate inflation and economic volatility.

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Questions & Answers

Q: What is James Davolas' investment approach and focus?

Davolas focuses on hard assets and real asset companies with minimal capital intensity and high operating leverage. He emphasizes a capital light business model.

Q: How does Davolas view the current economic landscape?

Davolas believes that higher interest rates and inflation will have a lag effect on the broader economy. He expects resilience in the short term but anticipates pressure on profit margins in the long term.

Q: What are the key drivers of inflation according to Davolas?

Davolas identifies globalization, productivity gains, and cyclical and structural drivers as factors contributing to inflation. He emphasizes the need for improved supply in industries such as energy, food, and agriculture.

Q: How does Davolas approach portfolio construction to protect against inflation?

Davolas seeks out companies that can grow revenues while minimizing cost increases. He looks for businesses with a scalable margin expansion model and identifies financial exchanges and brokerages as examples.

Summary & Key Takeaways

  • James Davolas focuses on hard assets and real asset companies with minimal capital intensity and high operating leverage.

  • His investment approach is centered around a capital light business model and a strategy to benefit from inflation and changing economic landscapes.

  • Davolas believes that profit margins will be a key concern in the coming months and expects increased pressure on corporates.

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