running a high conviction portofilio in noisy market

Focus on getting to know the people behind investment portfolios.
Hosts discussions with analysts, portfolio managers, sharing lessons learned, ideas, and insights on investment.
Today's guest: Emmy Kozlov, equity portfolio manager in LA, advocate for women's investment literacy.
Conversation framed as a master class in managing risk, building conviction, and long-term thinking.

Emmy's punctuality praised, even after experiencing a flat tire on the way to the podcast.

Started at the Walt Disney Company in Southern California.
- Worked in a financial planning group reporting to the CFO.
- Responsibilities included rolling up corporate quarterly earnings models.
- Interaction with buy-side analysts, sell-side analysts, and portfolio managers led to insights into market operations.
Transitioned to the sell side as a research analyst covering stocks, despite initially having limited knowledge beyond Disney's quarterly earnings.
- Moved to New York with family and started as a retail analyst.

Described a desire to move to the buy-side, longing to become an investor rather than remaining in the short-term focus of sell-side.
After numerous interviews, received an offer from Capital Group to be a retail analyst.

Early experience in retail taught Emmy about volatility and competition, characterizing the environment as "guerrilla warfare":
- Emphasized the need for separating signal from noise in stock performance due to competition.
Transitioned to covering diversified financials, which presented a stark contrast: complex, opaque business models but with significant pricing power and competitive advantages.
Combination of experiences led to a more rounded investment approach, integrating nimbleness from retail with the discipline from diversified financials.

Self-described style characterized by mental flexibility as a critical edge in investing.
- Critical to adapt strategies as facts and market conditions evolve.
- Emphasis on investing in durable business models, pricing power, and competitive advantage of companies.
Investments are characterized as concentrated:
- Maintains around 30 holdings for manageability and focus.
- Larger positions taken when confidence aligns with input from partnered analysts.
- Willing to allow substantial positions (e.g., over 10%) in concentrated areas when conviction matches potential.

Emphasizes collaboration with other portfolio managers at Capital Group.
- The system allows distinct styles to flourish under one umbrella, mitigating individual key-person risk.
- Principal investment officers oversee the overall risk profile while granting portfolio managers autonomy.

Artificial Intelligence (AI) regarded as a revolutionary force, bringing transformational changes across sectors beyond just technology companies.
- Investing in the foundational infrastructure needed to support AI growth (e.g., semiconductor supply chain, electrical grid).
- Prefers early-stage infrastructure investments rather than software applications at this phase.
Healthcare sector of interest for its undervalued potential amid the current market, focusing on AI's role in drug discovery and personalized medicine.

Cautions against investing in turnaround stories:
- Previous experiences with retail investments (e.g., Coach, Urban Outfitters, Lululemon) highlighted the lengthy and difficult nature of such recoveries, often leading to significant underperformance.
Turnarounds often costly and require excellent execution.
Emphasis on learning from these difficulties and resulting investment philosophy changes.

Highlights two influential mentors:
1. Sally Kroczek: Research Director at Sanford Bernstein, emphasizing the importance of playing to one's strengths and authenticity in a male-dominated industry.
2. Lisa Shalott: CIO of Morgan Stanley Wealth Management, imparting lessons on overcoming failures and moving past mistakes in a constructive manner.

Private Ownership: Allows for long-term strategy development free from public shareholder pressure.
Collaborative Culture: Absence of a star system promotes collaboration and risk-taking among investment teams, fostering trust and reducing the risk associated with key individuals.

Emmy speaks to an inspiring piece of art in her office symbolizing diverse investors.
Advocates for enhancing women's investment literacy given the gender gap in investment behaviors (e.g., women investing later, more conservatively, and ending up with less money due to longevity).
Provides personal anecdotes of her daughter opening an investment account and her success leading to increased interest in investing.

Encourages women to enter the investment industry and to bring peers along.
Urges potential investors to commit to learning, avoiding the pitfalls of short-term thinking, and actively participating in the industry as they grow.
Expresses gratitude for her recovery from advanced-stage breast cancer, emphasizing support from her family as a major factor in her journey.

Thanks the podcast host for the conversation and emphasizes the gratitude for her support network, including her experience at Capital Group, contributing positively to her career and personal life.