PIWORLD interview with Bill Fawkner-Corbett: Investing In Compounders and SIGnet membership

Bill Fawkner-Corbett, Head of SIGnet, takes us through his journey of discovering Compounders and the reasons for investing in them. He gives one example of a mistake he made selling Microsoft, which made him realise he had no effective tool for valuing Compounders. In his subsequent reading, he discovered the Graham Formula, which gave him a method for calculating the PE ratio for a company based on growth. This set him on a search for alternative methods that would take account of other metrics (e.g. return on capital) in the PE calculation; his explanation of what he found is fascinating. Although all the examples he gives in the presentation are US shares, the majority of Bill's portfolio is in UK shares – he stresses that more than a few of these he considers to be Compounders. This is a presentation Bill gave to his SIGnet group and is an example of the material that might be covered by your local SIGnet - Serious Investor Group Network. SIGnet groups of private investors meet regularly to discuss shares and investing strategies to benefit their investing performance. At the end of the video, and below, there are more details of SIGnet and how to find your local group. 00:18 - Introduction 01:33 - Bill's background 02:44 - Characteristics of a compounder 07:02 - Market value VS Intrinsic Value 08:38 - The PEG method 12:45 - The Graham Formula 13:39 - Margin of safety & Internal rate of return 16:48 - Growth & value creation 18:30 - Cost of capital & ROCE 20:36 - Credit Suisse Method 24:44 - Recent examples 27:59 - About SIGnet 29:46 - How to join SIGnet About Bill Fawkner-Corbett Bill’s professional experience for the past 30 years has been in Private Equity and Corporate Finance in Central & Eastern Europe. He has been a private investor for around 50 years, initially in Investment Trusts, Unit Trusts and ETFs; since 2008 in individual shares. In early 2020 he joined SIGnet, a national network of private investor groups. He became Head of SIGnet in May 2023. His presentation is a compilation of presentations he has recently given to SIGnet groups. To join SIGnet, or just to find out more, go to: https://www.sharesoc.org/signet/