TIP529: JOEL TILLINGHAST &

UNCOVERING THE ART OF OUTPERFORMANCE

27 February 2023

On today’s episode, Clay Finck reviews Joel Tillinghast’s book, Big Money Thinks Small, and does analysis on two companies built around acquisitions – Brown and Brown Insurance and Constellation Software.

Joel is an incredible long-term investor as he has consistently outperformed the market and currently manages around $70 billion at Fidelity. Peter Lynch, who hired Joel at Fidelity, has described Joel as “one of the greatest, most successful stock pickers of all time.”

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IN THIS EPISODE, YOU’LL LEARN:

  • Why some level of speculation is required in every investment.
  • What speculations are acceptable in Joel Tillinghast’s conservative investment approach.
  • What you need to understand about a company prior to investing.
  • Why Tillinghast avoids investing in gold.
  • Why investing in countries with the fastest GDP growth rate isn’t a wise investment strategy.
  • Clay’s insights into two acquisition-focused companies – Brown and Brown Insurance and Constellation Software.
  • Why Constellation Software may be worth further investigation for stock pickers interested in high quality businesses.

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:03] Clay Finck: Welcome to The Investor’s Podcast. I’m your host, Clay Finck. It’s great to have you as in today’s episode, I’ll be covering a book by Joel Tillinghast called Big Money, Thinks Small.

[00:00:14] Joel Tillinghast is an investment legend who has managed money with Fidelity for 36 years and manages 70 billion. Peter Lynch hired Joel at Fidelity and he described him as one of the greatest, most successful stock pickers of all time since 1989. Joel has beaten the market by 3.7 percentage points, which is just an incredible.

[00:00:37] During this episode, you’ll gain insights about how the future is entirely uncertain and some level of speculation is required in every investment. What speculations are acceptable for Joel’s conservative investment approach? What you need to understand about a company prior to investing? Joel’s thoughts on why he chooses not to invest in gold. Why investing in countries with the fastest GDP growth may not be the best decision and so much more.

[00:01:06] At the end of the episode, I’ll do some stock analysis on two companies that focus on acquiring businesses for their continued growth, Brown and Brown insurance and Constellation Software. Constellation Software specifically is a very interesting case study as Mark Leonard who has at the helm of the company, has increased the share price of Constellation at an astounding rate of return of 34% annually increasing the stock price by over 125 times. So be sure to stick around and tell the end of the episode to learn more about Constellation in the brilliance of Mark Leonard.

[00:01:40] With that, let’s dive right into today’s episode.

[00:01:47] Intro: You are listening to The Investor’s Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected.

[00:02:07] Now Peter Lynch wrote the foreword to this book and he gives Tillinghast quite high praise. He says that there are many skilled investment professionals whose funds have beaten their benchmarks, and Joel Tillinghast is right up there with them, and that there are a lot of books out there that purport to help you become a better investor but few mesh the human aspects of investing and business with the number side. And even fewer do that by drawing on the experiences of arguably one of the most successful stock pickers and active mutual fund managers over the past three decades.

[00:02:41] Lynch was actually the person that ended up hiring Tillinghast at Fidelity in 1986. He says, I have witnessed Joel’s growth as an investment professional, and I continue to be amazed by an almost unworldly ability to consume mountains of information about hundreds of companies at a time, analyze them and distill them and use it to find long-term winners while avoiding many of the losers.

[00:03:06] Lynch received a cold call from Tillinghast and Lynch was immediately blown away by the knowledge that this guy had. Immediately after he received a call, he called the head of Fidelity’s investment division and said, we’ve gotta hire this guy. He is just unbelievable. In his book, Joel argues that you cannot learn to become a great investor.

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