Transcript:

If we’re in a low-growth environment, but also with low interest rates, we really have to look at our companies and try and identify those businesses we think can grow faster than the market. And if we pay a reasonable price for those businesses, we should get a better return than the market. So, I think investors need to think about the alpha, the generation of extra return above the benchmark, to drive returns rather than just get benchmark returns.

I’m trying to find those companies that I actually can find solid investments if I understand the businesses. I’ve got a good feeling for why they’re going to grow [and] the right price for those companies. And we have to be, you know, cautious about price. We have to think reasonably. We won’t overpay. But if we spend our time [and] do the work correctly, then I think we can find some really interesting opportunities. So, when prices are moving around, that clearly can provide opportunity. So, if there’s something we thought was too expensive, we’re patient; we wait. And if we get something like a market correction, it may well give us that opportunity.

I’ll give you an example. There’s a software company in Europe that helps provide solutions for banks whose basically old legacy systems don’t work very well together, particularly if they’ve made acquisitions. Now this is a company we’ve liked for a long time; it looked quite expensive. In this rout that we saw in December, particularly over the Christmas period, where the computers took charge of the indexes, this gave us an opportunity. The stock came back about 30% and was now where we were very happy to buy it. And as a result, we were able to step in. So, if you’ve done the work, you know why you want to own the company [and] you know what you think the right price is, you can use that volatility to your benefit.