🗣️ Investor Talk #26: Pieter Slegers

Founder - Compounding Quality

Apr 29, 2024

Welcome to Investor Talk — where we interview successful investors to uncover their journeys, strategies, and the lessons they've learned. Get inspired by real stories and gain valuable insights to sharpen your own investment approach.

Every interview follows the same set of sharp, insightful questions — such as “What is your investment strategy?”, “What are your highest conviction stocks?”, and “What’s the biggest investment mistake you’ve made?”

👉 Check out all previous Investor Talks here
Including interviews with Brian Feroldi (Founder - Long Term Mindset), Shay Baloor (Host of Stocktwits) and Gav Blaxberg (CEO - WOLF Financial).

In this edition, we have the pleasure of interviewing:

Name: Pieter Slegers @QCompounding
Age: 27
Residence/Country: Belgium
Invests since: 2010

𝗜𝗻𝘁𝗿𝗼𝗱𝘂𝗰𝘁𝗶𝗼𝗻
It was the summer of 2010, I was 13 years old, and I started working at the local supermarket to save some money. It wasn't my thing at all; I was counting down the hours. That summer, friends of my parents came over and started talking about the stock market, which was completely new to me. After the summer job, I deposited all the money I had earned that summer into an investment account, with absolutely no knowledge or understanding of the stock market. I then invested all the money in a Belgian oil and gas stock. I made every mistake I could make: no diversification, no research, and so on. The result was that after one year, I sold the stock at a 60% loss.

In hindsight, this was the best thing that could have happened to me at that time. It was incredibly painful, but as an investor, you are bound to make mistakes, and it is much better to make them with a small amount of money than with a large one. I had two choices then: quit investing or study the stock market. I chose the latter. I started reading financial newspapers and books, which only fueled my interest in investing.

I always wanted to become a teacher, but I ended up studying Financial Management at the KU in Leuven. After my study, I worked for three years at a wealth management firm in Antwerp, where I, along with a colleague, was responsible for managing an equity fund. In summer 2022, I have started Compounding Quality, where I can combine my passion for investing with my desire to teach: educating people about investing.

𝗪𝗵𝗮𝘁 𝗶𝘀 𝘆𝗼𝘂𝗿 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝘆?
My investment strategy is Compounding Quality, which means leveraging the power of compound interest with high-quality stocks. In summary: Invest in the best companies in the world at a fair valuation, or as Buffett says, 'buying a wonderful company at a fair price instead of buying fair companies at a wonderful price.'

My investment strategy consists of three steps:
1. Identifying wonderful companies: healthy balance sheets, good capital allocation, low capital intensity, high profitability, attractive growth, and so on.
2. Excellent managers: leaders with skin in the game, preferably founder-led or family-run businesses.
3. Finding and buying these companies at a fair value.

The goal of quality investing is to hold onto these quality stocks for a very long time ('The best time to sell is almost never') and focus on the business rather than on quarterly earnings. Quarterly results are 90% noise.

𝗛𝗼𝘄 𝗺𝗮𝗻𝘆 𝘀𝘁𝗼𝗰𝗸𝘀 𝗮𝗿𝗲 𝗰𝘂𝗿𝗿𝗲𝗻𝘁𝗹𝘆 𝗵𝗲𝗹𝗱 𝗶𝗻 𝘆𝗼𝘂𝗿 𝗽𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼?
My portfolio currently consists of 10 high-quality stocks. The goal is to build a full investment portfolio of 16 to 18 companies. This relatively small number is due to the strict quality criteria, which leave only a few companies remaining. Additionally, most of the remaining companies are too expensive, limiting the potential additions to the portfolio.

𝗪𝗵𝗶𝗰𝗵 𝘀𝗲𝗰𝘁𝗼𝗿𝘀 𝗱𝗼 𝘆𝗼𝘂 𝗺𝗮𝗶𝗻𝗹𝘆 𝗳𝗼𝗰𝘂𝘀 𝗼𝗻?
I am a bottom-up stock picker. Once I find an attractive stock, I am not concerned about the country in which it is listed or the sector it belongs to. But I never invest in unprofitable companies, nor do I invest in cyclical businesses such as lithium or gold miners, oil and gas companies, or car manufacturers. I also try to avoid companies operating in rapidly changing sectors because it is much harder to predict how a company will evolve. An example of this is the AI-sector.

𝗪𝗵𝗮𝘁 𝗮𝗿𝗲 𝘆𝗼𝘂𝗿 𝗵𝗶𝗴𝗵𝗲𝘀𝘁 𝗰𝗼𝗻𝘃𝗶𝗰𝘁𝗶𝗼𝗻 𝘀𝘁𝗼𝗰𝗸𝘀?
$EVO.ST - Evolution AB is a Swedish company that develops and produces online casino solutions to gaming operators. They are highly profitable and have excellent financial figures.

$KPG.AX - Kelly Partners Group is a small cap Australian serial acquirer who have the same business model as Berkshire and Constellation Software with Brad Kelly as as very ambitious CEO.

$ITP.PA - Interparfums is a stock I've been looking at recently. They are a market leader in a niche market and own 44% of the shares. They collaborate with luxury brands and operate with a capital-light business model, making them highly profitable. Additionally, the valuation is now becoming attractive.

𝗪𝗵𝗮𝘁 𝗶𝘀 𝘁𝗵𝗲 𝗯𝗶𝗴𝗴𝗲𝘀𝘁 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗺𝗶𝘀𝘁𝗮𝗸𝗲 𝘆𝗼𝘂 𝗵𝗮𝘃𝗲 𝗺𝗮𝗱𝗲?
My biggest mistake in investing is being too hasty. You come up with a certain idea and want to execute it today or tomorrow. But then I see from my own experience that these are often not the best decisions. I have learned from this by first thoroughly working out the investing ideas/strategies, then leaving them for a week or even a month, and then re-evaluating the initial idea/approach. Then you will look at it more rationally.

Additionally, a good lesson is to examine every bullish investment case by considering the views of those who argue the opposite or hold a bearish view on it.

𝗖𝗮𝗻 𝘆𝗼𝘂 𝘀𝗵𝗮𝗿𝗲 𝘀𝗼𝗺𝗲 𝗼𝗳 𝘁𝗵𝗲 𝗺𝗼𝘀𝘁 𝗶𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁 𝗶𝗻𝘀𝗶𝗴𝗵𝘁𝘀 𝗳𝗿𝗼𝗺 𝘆𝗼𝘂𝗿 𝗻𝗲𝘄 𝗯𝗼𝗼𝗸?
The aim of the book 'The Art of Quality Investing' is to provide a framework on quality investing. What is quality investing? Does it work? How can you find such quality stocks? How do you value it? And how do you build a quality portfolio?

People who read the book will understand the entire philosophy of quality investing and can then apply it in practice.

𝗠𝘆 𝗳𝗮𝘃𝗼𝗿𝗶𝘁𝗲𝘀
Favorite book: What I learned about investing from Darwin by Pulak Prasad

Favorite podcasts: Founder Podcast by David Senra @founderspodcast and The Business Breakdowns Podcast @bizbreakdowns.

Favorite quote: "I'm a shameless copycat." - Mohnish Pabrai @MohnishPabrai

Favorite FinX account: Guy Spier @GSpier and Vitaliy Katsenelson @vitaliyk are great role models for me. If they have something to say on X or LinkedIn, I definitely pay attention.

𝗪𝗵𝗲𝗿𝗲 𝗰𝗮𝗻 𝘄𝗲 𝗳𝗶𝗻𝗱 𝗺𝗼𝗿𝗲 𝗶𝗻𝗳𝗼 𝗮𝗯𝗼𝘂𝘁 𝘆𝗼𝘂?
For all company analyses and my portfolio, you can best look on my website: http://compoundingquality.net

If you are interested in my book 'The Art of Quality Investing', it is now available on Amazon. When you search the book title, you will find it immediately.

That’s a wrap!
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🗣️ Investor Talk #26: Pieter Slegers

Founder - Compounding Quality

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