Jim Golan: Building A High-Conviction Portfolio For The Long Haul | Summary and Q&A

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July 1, 2021
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Investor's Business Daily
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Jim Golan: Building A High-Conviction Portfolio For The Long Haul

TL;DR

Jim Golan discusses his approach to building a concentrated, high-conviction portfolio and shares his insights on market trends, such as the shift back to growth stocks and the digitization of the global economy.

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Questions & Answers

Q: How does Golan build a concentrated portfolio and what factors does he consider?

Golan looks for secular growth industries, competitive moats, strong financials, and a culture of innovation. He believes in identifying companies that can compound earnings over time and achieve predictable, strong cash flows.

Q: What has driven the recent shift back to growth stocks?

Golan attributes the shift to investors' confidence that inflation will be transitory. As rates pull back and investors anticipate slower economic growth, growth stocks have become more attractive again.

Q: How does Golan assess the impact of interest rates on growth companies?

Rising rates can impact the valuations of growth stocks, as seen earlier this year. However, with the current trend of decreasing rates and investor confidence in low inflation, growth stocks are becoming more favored again.

Q: Why does the Purchasing Managers' Index (PMI) index receive significant attention?

The PMI is a leading indicator of overall economic and industrial activity. When it surpasses 60, it signals robust economic growth, whereas a level near 50 suggests a potential recession. Golan expects the PMI to peak soon and anticipates a slowdown in economic growth, which historically favors growth stocks.

Summary & Key Takeaways

  • Jim Golan manages the William Blair Large Cap Growth Fund, which holds a concentrated portfolio of around 30 stocks diversified across sectors.

  • He focuses on identifying secular growth industries and companies with competitive moats, strong financials, and a culture of innovation.

  • Golan discusses the recent market shift back to growth stocks, the impact of inflation concerns on interest rates, and the importance of the PMI index in assessing economic activity.

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