Morningstar Advisor - February/March 2010 - 55

The magazine of investing insights for independent-minded advisors February/March 2009 a less frenzied pace. He grew up on a farm outside Kansas City and says that experience helped instill patience. It also served to rein in expectations. “Some years, it rains, and it’s a good year,” he says. But farmers know lean years will come, as well. “So, I never expected stocks to go up in a straight line.” Behind the aw-shucks demeanor lies an inquisitive mind—and a highly educated one. Moffett received a bachelor’s degree in history from Harvard, where he wrote his senior thesis on the commercial connections between Britain and Argentina in the early 19th century. He then headed straight to Stanford for an MBA. From there—with an interruption for military duty as a reserve officer, for this was the Vietnam era—he went into investing. dreadful 1973-74 bear market reinforced the knowledge gained from his farming background: Tough times are part of the package, and markets inevitably move in cycles. Successful investing, therefore, requires patience and a long-term view. Morningstar Advisor February/March 2009 Financial Crisis An Unorthodox Approach When he started running Scout International in 1993, Moffett says, the fund was a “sideline” to his main job managing bank-trust accounts. No analysts were assigned to him or the fund, so he says that he “drafted the expertise” of the in-house analysts researching U.S. firms, “trying to get them to think outside the borders.” Left essentially on his own, Moffett coped in the early days by limiting the portfolio to about 40 stocks and focusing only on companies whose shares traded in New York as ADRs. Greenspring Moffett makes it clear that his career decision Not until 2000 did the firm start building a team owed to interest in the field, not a desire to specifically for the international fund, and make the big bucks. “At the time, investment The magazine of investing insights for independent-minded advisors Summer 2008 The Bet Is Risk the process went slowly. It now totals seven:beOnly Safe by the recent meltdown is to ignore the volatile history of capital markets. management wasn’t as glamorous as it is now,” To surprised three managers and three analysts in addition he says. “It wasn’t seen as the road to instant to Moffett. One of the current analysts had wealth, as it is for young people today.” been among those “drafted” by Moffett way back at Scout’s inception. A more-recent With his Midwestern roots, his passion in addition came from Morningstar’s equityinvesting for investing’s sake, and his folksy research team. The entire group meets once or manner, some might associate Moffett twice a week, and Moffett says that while with Warren Buffett. Not so fast. Both use a he’s responsible for pulling the trigger on buys patient, low-turnover style, but otherwise their and sells, he generally looks for a consensus approaches have little in common. Most among his team and doesn’t often overrule it. important, Moffett has never been a classic value investor—he has leaned toward growth. Moffett says that it hasn’t been hard to attract good analysts and managers to Kansas City. Why would a cautious, farm-raised kid head Subscribe today! Hires tend to be self-selecting, he says, with in that direction? Moffett credits his military Call 888 235-0828 or visit most having roots in the area. Nor is the experience. He served stateside as a datalocation as much of a handicap as one might processing officer in the Air Force and says that MorningstarAdvisor.com think in attracting company visits. Moffett says he acquired much more familiarity with plenty of firms come through town to meet computers and other technology than most with his firm as well as the teams at American people of his generation did. It probably didn’t Century and Waddell & Reed. hurt that he learned his trade during the mid-tolate 1960s, a period when “go-go growth” Although his analysts now travel overseas, strategies, as they were known, were providing Moffett says that they’re more likely to attend eye-catching returns. conferences where they can meet executives from many firms at once rather than making the That go-go era came to a painful end. And the company-by-company visits typical of most fact that Moffett also had to deal with the MorningstarAdvisor.com Mandelbrot, Cooper, and Ibbotson Morningstar Advisor Summer 2008 Morningstar Advisor magazine Free. Don’t miss an issue! College Planning Sequoia Big Banks MorningstarAdvisor.com 55

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Morningstar Advisor - February/March 2010

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