This week, Rusty Vanneman and Nick Codola talk with Dan Davidowitz, lead Portfolio Manager of Polen Capital's Focus Growth strategy. In this episode, we will discuss the stumbling of the growth factor and potential impacts on the Mag 7. What happens if earnings for growth companies slow down in this market characterized by high valuations? In addition, we take a look at what impact this could have on the broader global economy, as well as markets.
This week on Weighing the Risks we are joined by Dan Davidowitz, lead Portfolio Manager of Polen Capital's Focus Growth strategy. Dan is lead Portfolio Manager of Polen Capital's Focus Growth strategy. Prior to joining Polen Capital in 2005, Dan spent five years as Vice President and Research Analyst at Osprey Partners Investment Management. Previously, Dan spent one year as a Research Analyst at Value Line, Inc. and five years in the health care sector, holding various analytical positions at Memorial Sloan-Kettering Cancer Center. Dan received a B.S. with high honors in Public Health from Rutgers University and an M.B.A. from the City University of New York, Baruch College Zicklin School of Business. Dan is a CFA® charterholder and a member of the CFA Institute and the CFA Society of South Florida.
Key Takeaways
Quotes
[09:27] ~ “What’s extraordinarily consistent about corporate America’s earnings growth, is overtime it does tend to kind of smooth out to around 6% or 7% earnings growth through cycles…for the S&P500, and then you put dividends on top of that, and that’s how you get the return of the S&P500 overtime. Our portfolio is not too much different than that, except the levers are a little bit different. So, our companies are growth companies, they don’t really pay out a lot of dividends, so we don’t get much of our returns from dividends, if at all. But, the earnings growth of our portfolio is significantly faster.” ~ Dan Davidowitz
[14:18] ~ “Every time there’s been a big technological transformation, it starts with hardware and then you have services and applications built on top of that hardware that eventually become the real value creating stuff…like the Amazons and Googles that were built on the broadband internet, we’re going to have something similar with generative AI. You’re going to have native Gen AI businesses, and also generative AI add-ons to existing businesses that are going to be value creative. Polen Capital is looking more toward that later group. We want to be part of the services and applications that have long-term, durable recurring revenue that will last a long time…but we are not looking to play the cyclical hardware so to speak.” ~ Dan Davidowitz
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