The Wooding Group’s long held conviction in the value of detailed research and due diligence (as in: leave no rock unturned!) took us on a field trip in November to the Walter Scott Global Investment Conference held in Edinburgh.
Walter Scott, (not to be confused with the famed Scottish poet) is a well-respected global research and investment firm; formed over 65 years ago by Founders Ken Lyall and Ian Clarke. The firm doesn’t support allocating funds to marketing; asserting that their best budget is spent on existing clients; they find it unnecessary to spend money elsewhere. In a recent interview of all Walter Scott employees, three response words were found to be common: consistency, conservative, and family. Intellectually and culturally, Walter Scott has proven over 20 years+ to be an excellent fit in the category of global management on behalf of The Wooding Group’s clients.
Walter Scott’s core expertise lies in their Active Management approach to investing which they stressed is incredibly important in the current environment. They maintain that the tide may be turning or already has – and that a period of lengthy stagnation could occur, wherein active management will outperform the U.S. indexes quite significantly.
In 2001 Walter Scott was vindicated after they stated: “We detest index funds. They have risen to fame in a rising bull market, they are an abrogation of responsibility, their tracking error represents the greed factor.”
Charts are crude measurements needing context. Context is established through effective research. Walter Scott’s research discipline involves voracious reading and deep financial analysis. They also hold that “feel it, see it, experience it”, coupled with canvasing diverse opinions is key for true insights.
The solid research process adhered to at Walter Scott has garnered much success over the decades. They state: “ We want research to be pure, we want research to be innovative; we go beyond the usual investment events to get a real understanding of the challenges and opportunities facing the companies that we’re investing in or may invest in the future.” The tried and the true coupled with innovation and disciplined risk management prove to be a powerful combination.
Walter Scott’s 3 high conviction GOALS:
- Never experience a permanent loss of capital
- Pursue a “Real Rate” of Return of between 7-10%
- Exert patience when relative under performance occurs.
At the Wooding Group, we believe that well-diversified portfolio mandates should hold complementary strategies. Creating a balance between active security selection with different characteristics and complementing those with passive indexes provides the best of all worlds; from a Risk management, Cost profile, and overall Return point of view.