Most investors go to the Master Investor conference to come away with some stock ideas which is precisely why the best attended speech today was by Mark Slater. While some of the speakers at the show have mixed agendas, Slater is a classic growth company investor and speaks about his stock picks with the same integrity and assuredness as his famous father Jim. It’s a style that has made the pair strong favourites amongst private investors and while he couldn’t attend the show in person, his pre-recorded presentation didn’t disappoint.
The Slater family champion a set of strict growth investment criteria focused around the PEG ratio - the goal being to buy strong, cash generative growth companies at reasonable valuations. These criteria haven’t really changed since they were delineated in Jim Slater’s very popular book ‘The Zulu Principle’ in the early 1990s and both Slaters continue to preach from that script.
Mark actually helped his father research the Zulu Principle books and invests his extremely successful fund, MFM Slater Growth, very much according to that set of criteria. While he has been known to take advantage of special situations at opportunistic moments such as at the 2009 market lows he currently sees little value in asset plays or recovery situations in the current market, only highlighting 21st Century Group as detailed below. Today he’s focused on buying classic Zulu Principle growth stocks at reasonable valuations - a strategy that he’s shown in practice has a tremendous track record for market beating returns.
Slater is not as worried about the market as he was a few months ago noting that all investors have been very focused on the big picture issues at large for some time. He maintains that equities are reasonable value and that they are ‘by far the most attractive asset class’. But he cautioned that with the ongoing deleveraging of the consumer and increased tax cost to society that investors have to remain cautious and avoid the worst impacted sectors.
He discussed his investment methodology which essentially boils down to a three step process.
- Quantitative Screening Screening the market with the now familiar set of criteria. A PEG < 1, consistent EPS Growth and Cashflow > EPS. Perhaps stemming from his practice of investing larger sums of money in an institutional setting, he…