Animal Spirits Podcast with Jensen’s Allen Bond

June 2022

Talk Your Book: Quality Growth Investing

Jensen’s Allen Bond joins Michael Batnick and Ben Carlson of the Animal Spirits Podcast to discuss what qualities to look for in growth companies and how they perform during inflationary periods.

From the podcast:

“[W]e believe that stock prices will follow earnings or follow cash flow over time—there’s a really strong relationship between stock prices and earnings growth, but we know that doesn’t always happen in a straight line. [Stock] price could get way ahead of earnings or earnings could get getaway ahead of price, and it’s hard to know exactly when that’s going to happen. But, as I think they say in our business, “being early and being wrong are often the same thing.” I think that’s why, for us, being really patient is really critical in not getting caught.

As a long-term investor, you can’t ignore the short-term because, eventually, the short-term can become the long-term. So, you need to be aware of the short-term, what’s priced into the stock in the short-term, and be confident in that view, even if you think the short-term is wrong. But then, why is the long-term right?

As long as there’s patience around that and discipline, we’re not going to try to time it. We’re not trying to look for a catalyst. [We’re not trying to say], “Oh, this is going to make the stock rerate be right.” What we do want to say is, “is this business still high quality? Does it still benefit from competitive advantages? Is it still creating business value? And, are we in at a fair price?” If … we can check the box on all those things, we’re willing to be patient and to not try to be smarter than the market in the short-term, [but instead] try to focus on what we can know for the long-term.”

~ Allen T. Bond, CFA®, Managing Director, Head of Research and Portfolio Manager


Discount Rate: Is the rate of return used to discount future cash flows back to their present value.

Discounted Cash Flow (DCF): Analysis uses future free cash flow projections and discounts them (most often using the weighted average cost of capital) to arrive at a present value, which is used to evaluate the potential for investment.

Return on Equity: Is equal to a company’s after-tax earnings (excluding non-recurring items) divided by its average stockholder equity for the year.

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Mutual fund investing involves risk, and principal loss is possible. The Fund is non-diversified, meaning that it may concentrate its assets in fewer individual holdings than a diversified fund, and is therefore more exposed to individual stock volatility than a diversified fund. The prices of growth stocks may be sensitive to changes in current or expected earnings, may experience larger price swings and may be out of favor with investors at different periods of time.

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Diversification does not assure a profit nor protect against loss in a declining market.

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