Introduction to Learning to grow

Get to know this project and some of my core ideas.

Welcome to the Learning to grow substack. Thank you for clicking on a link from a mildly random bloke who is interested in investing. I hope you'll join me on my investment journey and that we can learn and grow together!

The goal of this substack will be to share knowledge. I'll try to share thoughts, articles and podcast episodes, and research of individual companies. Read more about the substack here.

This first article is about:

1. Who am I, and what is Learning to grow?

2. What companies do I have in my portfolio?

3. My favourites who have taught me the most

Who am I and what is Learning to grow (LTG)?

Before I start, a little about me:

I'm 31 years old, and I've been investing on and off for the past three years. During the last year, I've taken investing more seriously and it's become an important hobby for myself. I'm now at a point in my life where it makes sense to invest for the future, and for my children, family and even grandchildren at some point.

To boil my investment goal down, I want to be invested in companies that I have a good chance of growing old with.

This means that I largely want to avoid crazy growth (easy come, easy go). But at the same time I don't invest in individual companies just to be a co-owner of companies that are going to just perform OK.

I want to own companies that are able to reinvest their capital in steadily increasing growth and that capture more and more market share. It's important to me that my companies are leaders in their markets or niches.

A final principle I have is that I must be able to identify that I have an edge. By edge, I don't necessarily mean that I can do something no one else can, or that I'm an accounting guru who can spot what no one else are able to see in a set of financial statements.

It's about being able to point out that I have one or more advantages such as: Greater patience, willingness to own companies that are unpopular, unknown or boring, and that I have enough integrity to disagree with the market.

Before I go any further, it's important for me to say that I'm a beginner. Nothing I write should be taken to mean that I'm a guru who understands something no one else does. Three years of experience is nothing in the investment world and the last thing I want is for anyone to take what I say as investment advice.

I'm still learning and developing, and my writing should be an arena for both myself and my readers to learn more and to get feedback on our ideas and perceptions. I hope that any readers who disagree or see something I don't see will leave a comment. That's how we develop together!

Portfolio

My goal with the portfolio is to invest in companies that are able to reinvest their own earnings for sustained higher growth. The requirements I set for the companies I co-own are briefly summarised:

• High reinvestment ability (visible through a high ROIC/ROCE).

• Competitive advantages (high EBITDA and gross margins. It's important to have margins that are better than the competition, preferably significantly better).

• Ability to grow over a long period (Growth in revenue and EPS that leads to growth in FCF or NOPAT).

• Skilled management aligned with shareholders (Share incentives (not short-term option programmes), ownership stakes in the company and history of achieving stated goals).

• Low or no debt (again: easy come, easy go).

BONUS: Valuation (To own a company, the company's growth and earnings must be priced at a level where it makes sense for me to own it).

These are my five investment pillars. I don't consider valuation to be a pillar, but a necessity for an investment decision. It's not a good idea to buy the world's best company if it's priced to deliver at an impossible level.

I will try my best to remain honest and open about what I sell and what I buy, not to give my readers tips for how they should act, but to remain a writer that is equitable and answerable to my readers.

The portfolio is relatively elastic (to put it fancily). As an investor, I'm still in a phase where deposits mean a lot to the allocation, and the weighting is not constant. I aim at having a concentrated portfolio. My portfolio updates will come in my monthly posts, and I’ll try to give my rationale for potential sales and buys.

I do not focus to much on sector distribution. I believe risk management can be done in other ways than allocating investments to arbitrary sector or geographical definitions. The goal of the companies I own parts of, is that they have business models that provide good risk management in all kinds of economic environments.

I aim to have a concentrated portfolio consisting of good companies. My guiding principle in my investment journey will be:

I'm just an ordinary bloke, working full-time in a profession completely disconnected from the world of finance. I have no expertise, education or secret juice, all I have is my own time, curiosity and interest to put on the table.

That's why I strive to be invested in companies with understandable business models, with management teams that I can hitch a ride with while they drive alongside the long and winding road we all call “compounding”.

Learning from great people willing to share

As previously mentioned, this project is a way for me to continue developing and learning more about investing. I believe that one advantage small investors have in today's market is the willingness of many talented (small and institutional) investors to share their experience and knowledge. That's why I have a personal goal to learn from the right people, and separate the wheat from the chaff among all the available information out there.

There are endless podcasts, substacks, Twitter accounts and forums where ordinary and not so ordinary people share their knowledge and experience. It's a surprisingly short time since investors had to look up the share price in a physical newspaper, now everyone has access to all the info instantly. This leads to a lot of noise. I therefore want to hook up with those who ignore the noise and have a long-term focus.

Therefore, one form of content I offer will be summaries of insights I have gained. The goal is for my subscribers to receive a monthly list of individual episodes, articles or quick company pitches I've come across in the last month or so.

Nothing written in this article should be understood as a recommendation to either buy or sell. I am not a trained professional, and you really should not listen to anyone but yourself before you invest.