Lightly edited transcript
Interviewer: I am speaking with Hollie Briggs, head of Global Product Management at Loomis Sayles. First of all, Hollie, thank you very much for coming from the United States to participate in the Inside Network's Investment Leaders Forum. Byron Bay.
Hollie: It's a pleasure to be here. Lucky to have wonderful weather. Had a lovely swim yesterday.
Interviewer: Great presentation on behavioural biases in investment. Things such as herd mentality, recency bias. They often influence investor decision making or more often than often, and many advisors can relate to those conversations with clients. So how at Loomis Sayles, what strategies do you use to mitigate these biases within your own investment processes?
Hollie: Yeah, thank you. Good question. Really, I think it's our long investment horizon and our focus on long-term structural facts that help protect us from the short-term investor herd mentality which persistently presents itself. Our bottom-up fundamental valuation and our contrarian approach are key. For example, irrational fear can cause investors to oversell a stock. This then creates for us an opportunity to buy a high-quality, secular growth company at a significant discount to intrinsic value. In this way, understanding those inherent risks, that behavioral biases present, allows us to also recognize those opportunities.
Interviewer: Can it be as locked in a fact that the stocks always overshoot on the upside and always overshoot on the downside?
Hollie: It can happen in lockstep from time to time in markets. You can look at 2008, 2009, you can look at 2022, 2023, but we find most often that the opportunities to buy companies with a contrarian approach happens on a one-off basis. Something happens particularly to a company and then we have a chance to invest in it at a discount to intrinsic value. There are times when the market is efficiently priced and times when it's not. It's on a continuum.
Interviewer: You spoke about growth stocks, they can often command a premium valuation, but history's shown that buying them at the wrong time can lead to disappointing returns. So how do you assess whether a high-growth company is trading at a valuation that is justifiable, and what fundamental or market-driven factors carry the most weight in arriving at that decision?
Hollie: So for us, it really comes back to the bottom-up fundamental valuation process that we have and our long investment time horizon. If you have an 18-month time horizon versus a 10-year time horizon, whether or not a company looks overvalued can change. Um, so for us, as we said, we want to own these high-quality, secular growth companies, dynamics that aren't likely to change for a decade or longer, but we wait until an attractive price comes to us.
That means you have to be ready all the time because these moments are rare and unpredictable. So we maintain our coverage of these high-quality companies until all three aspects of our quality growth valuation investment thesis come together simultaneously. In some cases, we've waited more than five years. The point is, being prepared well in advance of the opportunity to make an investment helps you avoid some of the pitfalls of behavioral biases.
Interviewer: The search for alpha is in many ways a search for skill. What do you consider to be your team's most persistent source of mispricing and how does your team's approach to identifying those kinds of opportunities differentiate itself in what's an increasingly competitive investment landscape?
Hollie: So it really is the behaviors fostered by these biases that persistently present asset mispricing. This causes reflexive reactions to short-term market variables which when viewed rationally over the long-term have no impact on long-term value. So we've found that when investment decision making is driven by factors other than valuation, efficient, dynamic price discovery breaks down. But this creates an opportunity for active, long-term-oriented, valuation-driven managers like ourselves. And I believe our differentiation lies in our disciplined process and our patient temperament.
Interviewer: Evaluating an investment strategy solely on one metric, such as returns can be misleading. So what other key indicators do you track to assess whether your process is delivering as you intend and as you expect?
Hollie: So we have objective measures for each tenet of our alpha thesis. For example, we say we're a long-term investor. The objective measure for that would be portfolio turnover. If a manager says they're long-term, but their turnover is 60%, that would be a contradiction. Our global growth strategy with its nine-year track record has a 9% turnover.
So this is a way that you can demonstrate that there's integrity from what you say you believe through your process and the outcomes that you deliver.
Interviewer: Investors are often tempted to try to time the market, but the power of compounding really tells us that staying invested is usually going to be the better approach. But how do you navigate periods of extreme volatility and how do you, or do you ever, adjust positioning tactically or, or does the team always focus on maintaining that long-term perspective?
Hollie: We always maintain our long-term perspective, and we always keep valuation in focus. The difference about being a contrarian investor is that you actually begin your process by assuming this volatility is going to happen, and we plan for that. That's why we wait sometimes five years for the price to come to us. This is the moment in which you recognize the behavioral bias and also then take advantage of the opportunity that it presents.
So for example, over the 19 years we've been investing money, we've owned Amazon continuously, and it's had 14 drawdowns between 20 and 60%. But looking through that volatility and understanding what the long-term structural drivers are, having the bottom-up fundamental valuation helps us stay focused on the true long-term value.
Therefore, we will continue to hold through those periods and when possible, depending on portfolio guidelines, we will add to those positions on price weakness. It's actually, when we do, I would say that's a tactical decision because we've made it based on today's price, but it's taken advantage of that drawdown. So, you know, to take advantage of that, you have to be ready every day. And that's what we do.
Interviewer: Hollie Briggs from Loomis Sayles in the United States. Once again, Hollie thank you so much for coming all this way to attend and participate in the Inside Network's Investment Leaders Forum, Byron Bay.
Hollie: Well, thank you. It's been a pleasure.
The video was recorded in April, 2025
