Brad McGill — Senior Research Analyst
As I look back on my career as an investment professional, what impresses me is that my learning curve has never flattened. Over 17 years of analyzing and investing in public equities for institutional clients, I’ve lived through market cycles, worked on both the sell and buy sides, invested within varying strategies and learned countless lessons. At times humbling, those lessons have made me a better investor and at the same time have allowed me to appreciate Daruma’s distinctive culture and strategy.
After earning my BS in economics and finance at Lehigh University, I began my career at Smith Barney in the Equity Research Group. I was immediately drawn to the interconnectedness of business strategy, financial returns and stock performance. A year or so later, I was recruited to join Montgomery Securities in San Francisco to work for an analyst covering the retail industry. My first task was to analyze a single stock for several months. Each time I thought I knew the company cold, the group’s managing director sent me back to my desk with another list of questions to answer. While incredibly tedious, it was a fantastic lesson and built a baseline for what it means to truly know a company and understand its business model and financial statements — early insight into the benefits of concentration.
Moving up through the ranks on the sell side at Banc of America Securities, I aimed for a strong quantitative approach and sought to identify long-term value drivers within businesses. A stock picker at heart, in 2002 I transitioned to the buy side, where I could focus on research and broaden my scope. Working at two small long/short equity firms and then managing a long/short portfolio at Lehman Brothers, I learned to incorporate a strong risk management discipline into my investment process. I also learned that probabilistic thinking — mapping a range of outcomes against a market backdrop — is key to extracting more value from each investment idea.
I joined Daruma in 2006. I’ve found that our consistent process, level-headed portfolio manager, supportive culture, thoughtful valuation and disciplined risk management have allowed us to find, and stick with, great opportunities for our investors. The firm’s concentrated strategy allows us to focus on our best ideas and take advantage of the long-term opportunities served up by a short-term world.
At Daruma we are always on the hunt for positive change. Over the past several years, I have been increasingly drawn to companies that weave meaningful environmental and social policies into their operating strategies — where innovation to improve their influence has simultaneously created significant competitive advantages and more profitable businesses. Interface, Inc.’s product leadership and goal to eliminate its negative environmental impacts has driven huge customer demand and lowered costs; Chipotle’s drive to improve food quality and natural farming practices creates a better product, supply chain, and the best profit profile in the restaurant industry; and K12 Inc., with its innovative approach to educating students who are not succeeding in our public schools, enjoys enormous demand for its programs.