A recent article in Barron’s offers excerpts from an interview with Samantha McLemore, who has worked with fund manager Bill Miller for twenty years and launched her own firm, Patient Capital Management, last year.
Here are highlights from the interview, in which McLemore discussed her “buy what you know” investing approach:
- McLemore describes her approach with Patient as similar in philosophy and practice to her work with Miller. She also expresses her focus on having more female role models in the industry. “That also flows into the portfolio. We have, for example, more companies with women CEOs, not because we have targeted that, but just that we have a different perspective and find opportunities in different areas.”
- The pandemic has made people risk- and volatility-phobic, according to McLemore: “Recovery plays have been a big source of return, and we still see opportunity. There’s a ton of pent-up demand, so I see a potential for the analogy to the Roaring ‘20s.”
- On market optimism, she quoted John Templeton: “Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria.” She added that for most of the past ten years, the markets have “oscillated from pessimism to skepticism. We think we are more in the optimism [phase], with pockets of euphoria in higher-growth areas of the market.”
- Inflation would create pressure for expensive stocks, McLemore said, noting that she’s seeing a reversal in more speculative stocks and increased interest in value strategies.
- On regulatory concern with the “internet behemoths,” McLemore said that the worst case would be breaking up the businesses which, in her opinion, would be helpful to the stocks.
- McLemore identifies Alibaba as one of her favorite names, explaining that it’s trading at 21 times forward earnings and is “growing even faster than other internet companies. The reasons for the decline include the regulatory and competitive pressures,” she says, “which are well priced in. Regulators have moved on to other commerce players. I think it’s past the worst of it.”