A deep dive into the psychological approach to finding opportunity | EP154

Art of Boring

Building on his conversation in Episode 153, Portfolio Manager Samir Taghiyev takes a deep dive into the mental models and frameworks that Mawer uses to evaluate company management teams, particularly within the small-cap space. Using both personal and financial examples, he illustrates the benefit of exploration and exploitation, striking a balance between focus and curiosity, and identifying opportunities on the S curve of the corporate lifecycle. Key points from this episode:

• Company management can be evaluated by determining if they are growing revenues while controlling costs and risks. This can be combined with other frameworks to create a comprehensive picture.
• The exploration vs. exploitation framework can be used to evaluate how well management balances focus with curiosity.
• There are four phases in the S curve of the corporate lifecycle—startup, growth, maturity, and decline. Mawer focuses on companies in the middle two phases, with Trisura and TerraVest provided as examples.
• Incrementalism is very important when it comes to exploration vs. exploitation because it strikes a key balance between spending to de-risk and learning.
• Companies can either drive growth organically, often through the introduction of new products, or inorganically through acquisitions.
• Using the “look back” and “trust but verify” processes, the small-cap team leverages their historical notes and third-party information to improve their verification of management claims.

Host: Kevin Minas, CFA, Institutional Portfolio Manager Guest: Samir Taghiyev, CFA, Portfolio Manager For more details and full transcript visit: https://www.mawer.com/the-art-of-boring/ This episode is available for download anywhere you get your podcasts.

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Founded in 1974, Mawer Investment Management Ltd. (pronounced "more") is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore. Visit Mawer at https://www.mawer.com.

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