The Case For Owning Fewer, Better Stocks with Stephen Arnold
6/11/202641 min
Most investors spend their time looking for the next stock to buy, Stephen Arnold, Founder and CIO of Aoris, argues that great investing starts by knowing what not to own. In this episode, he explains Aoris’ quality-first approach, why the fund avoids entire sectors like banks, mining and biotech, and how a concentrated portfolio of just 15 businesses helps them focus on companies with durable advantages, strong cultures and long runways for growth.
In this episode:
00:00 – Why Aoris runs a concentrated portfolio
02:22 – What “quality-first value investing” means
07:52 – Red flags and Aoris’ no-go zones
09:29 – Compass Group: The world's largest contract caterer
18:29 – Cintas: The boring compounder hiding in plain sight
25:06 – The importance of defining what not to buy
27:13 – Why Aoris avoids banks, mining, biotech and more
35:19 – Why only 15 stocks and lessons for investors
Thanks to Aoris for sponsoring this episode and helping to keep our content free. The Aoris International Fund is available as an Active ETF, via the following ASX listed products: ASX: BAOR: Aoris International Fund Active ETF (Class B) & ASX: DAOR: Aoris International Fund Active ETF (Class D) (Hedged).
Visit the Aoris Website to download the Owners Manual - https://www.aoris.com.au/
ETFs and Stocks mentioned: Compass Group (LSE: CPG), Cintas (NASDAQ: CTAS), Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOGL), Amazon (NASDAQ: AMZN), Nvidia (NASDAQ: NVDA)
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Clips
Transcript preview
First 90 secondsBryce Leske· Host0:00
Now, you mentioned the portfolio has 15 stocks in it, so it's, it's relatively highly concentrated. What's the reason for concentration? Like, why is it important?
Stephen Arnold· Guest0:08
We're very, very selective to end up with our 15 leading businesses. You know, there are some that are successfully own fewer, Charlie Munger being one. [laughs] [laughs] Uh, and there are some that are successful with more.
Bryce Leske· Host0:19
Equity Mates. Welcome to another episode of Equity Mates, a podcast where we explore what's possible in the world of investing. My name's Bryce.
Alec Renehan· Host0:29
And I'm Ren, and today, we have an interview that I needed to listen to. [laughs] This interview is all about the art of saying no- [laughs] ... or how good investors avoid bad investments, and importantly for me, uh, the, the case for owning fewer stocks.
Bryce Leske· Host0:45
Yes, yes. [laughs] So we're sitting down with Stephen Arnold. He's the founder and CIO of Aorus. And you're right, Ren, today is all about, uh, learning about Stephen's approach of clearly defining when not to invest.
Alec Renehan· Host0:58
Yes, yes.
Bryce Leske· Host0:59
When not to invest, because, you know, we can get excited with all the opportunities- [laughs] ... that come through the door, and we can build a lot of, uh, individual positions in our portfolio, but a lot of success comes in, uh, I guess, concentration and really knowing where, uh, you don't wanna go.
Alec Renehan· Host1:14
Yeah, yeah. Knowing the game you are playing, and playing it well, and, uh, playing it consistently.
Bryce Leske· Host1:20
Yes.
Alec Renehan· Host1:20
And, uh, Stephen runs a very concentrated portfolio, around 15 positions. Um, and, you know, I have a habit [laughs]