Morningstar Magazine - August/September 2018 - 64

Investors

Teamwork and Legwork

Building and monitoring the portfolios involves
legwork as well as analysis and is a team
effort: Under Rozycki's direction, the analysts visit
management, call on customers and
suppliers, and interview former employees to
develop an understanding of company culture and
assess competitive advantages.
"The team has grown in numbers and talent. We've
got a very good group here, in terms of ability,
drive, and initiative," Nolin says. One analyst
recently retired, but they added to the team in
anticipation of this transition, and it now numbers
five analysts and a research associate.
Rozycki is tasked with bringing in new
analysts and immersing them in the investment
culture. He seeks not just professionals but
enthusiasts who are eager and able to travel
and interact effectively with company
management. "There is a high level of dialogue

64

Morningstar August/September 2018

and engagement across the team," he says.
"It's a strong group analytically and from a social
and networking perspective. We want people
who love the job."

Even at that point, Nolin says, "we might hash
it out some more. The analyst might do
more work, set up another call with someone in
the industry who knows the nuances."

While individual analysts have areas of expertise,
"we like everyone to think of themselves as a
generalist," Rozycki says. "As a general rule, ideas
go in all directions." Sometimes Nolin might
bring an idea to an analyst for research, for
example, but an analyst might also initiate the
process. The first step is to review 10-Ks and other
filings and work with Rozycki to determine
whether a prospect is worth further investigation.
If so, research intensifies to understand
corporate culture, assess competitive advantage,
and estimate intrinsic value.

A team book club fosters camaraderie and hones
investment knowledge. Nolin cites William
Thorndike's The Outsiders as one of his favorite
picks. The team recently read Intelligent
Fanatics Project, by Sean Iddings and Ian Cassel,
which provided examples of owner-operators who
built sustainable businesses. On the flip
side, Billion Dollar Lessons, by Paul B. Carroll and
Chunka Mui, offered cautionary tales.

"It's an iterative process," Rozycki says. After the
initial analyst assessment and then a deeper
dive in consultation with him, "we are ready to go
with a conclusion when we get to Bill."

The Right Place

The team atmosphere is one factor that has
helped draw and retain analysts. The Des Moines
location and lifestyle are another. As Nolin puts it,
some of the team previously experienced the
"90-hour-week, New York City investment-banking
lifestyle." He did his own stint in New York after



Table of Contents for the Digital Edition of Morningstar Magazine - August/September 2018

Contents
Morningstar Magazine - August/September 2018 - Cover1
Morningstar Magazine - August/September 2018 - Cover2
Morningstar Magazine - August/September 2018 - 1
Morningstar Magazine - August/September 2018 - 2
Morningstar Magazine - August/September 2018 - Contents
Morningstar Magazine - August/September 2018 - 4
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