Next generation value investor Mathew McLennan, successor to legendary value investor Jean Marie Eveillard of First Eagle Funds was on Consuelo Mack WealthTrack. Mathew is a portfolio manager of First Eagle Global fund and discusses where he is finding value in the global markets. His fund First Eagle Global is a 5 star rated fund by Morningstar.com
He discussed various topics from US Federal Quantitative easing to European Debt crisis to what he looks for before considering an investment in a company. Thing which stuck in my head most was Scarcity and Resilience. These are the two lenses through which Mathew looks at an investment. He says look for Scarcity, which comes in two forms – Tangible assets and Intangible assets. He gave natural resources as example for Scarcity related to Tangible assets. If something is scarce it will command more value and if you can find companies producing those assets at and that asset has a lot higher market value you have a business with competitive advantage.
Another form of scarcity he discussed comes from intangible assets aka brand, dominance of the industry etc.
He said Scarcity brings pricing power and pricing power makes your business resilient. Combine Scarcity and Resilience with strong capital structure and prudent management and you have a business with very low risk of capital impairment, and if that business is available at great prices you have margin of safety and that protects you when times are bad.
Credit and Source : www.wealthtrack.com, Consuelo Mack Wealthtrack
Lots of other intriguing thoughts shared by Mathew, Here is the video: