This week on Weighing the Risks we are joined by Dan Davidowitz, lead Portfolio Manager of Polen Capital's Focus Growth strategy. Dan is lead Portfolio Manager of Polen Capital's Focus Growth strategy. Prior to joining Polen Capital in 2005, Dan spent five years as Vice President and Research Analyst at Osprey Partners Investment Management. Previously, Dan spent one year as a Research Analyst at Value Line, Inc. and five years in the health care sector, holding various analytical positions at Memorial Sloan-Kettering Cancer Center. Dan received a B.S. with high honors in Public Health from Rutgers University and an M.B.A. from the City University of New York, Baruch College Zicklin School of Business. Dan is a CFA® charterholder and a member of the CFA Institute and the CFA Society of South Florida.

Key Takeaways

• [02:23] - Dan’s professional background and more on his current role at Pollen Capital
• [04:57] - How does Dan define risk and how does he think that advisors and investors should think about it?
• [06:14] - What risks keep Dan up at night and what guardrails, and indicators, does he keep an eye on as signals to protect against a bad market environment?
• [08:53] - What does Dan think about earnings growth for companies going into 2026 and beyond? Would an earnings growth contraction, or just deceleration, hurt the higher flying stocks?
• [11:51] - Have any of the recent developments in AI, and large language models, shifted Polen’s investment thesis in the space?
• [16:34] - Where is Dan seeing opportunities abroad and what does he think of China?
• [18:55] - How does Polen’s quality tilt flavor the opportunities that Dan sees the market presenting? What pockets of the market are getting him really excited at the moment?
• [22:37] - Base case market scenario and how probable Dan thinks this is
• [24:10] - Bad case market scenario and how probable Dan thinks this is
• [27:39] - Good case market scenario and how probable Dan thinks this is
• [32:23] - Are there any other risks that Dan thinks our listeners should be considering?

 Quotes

[09:27] ~ “What’s extraordinarily consistent about corporate America’s earnings growth, is overtime it does tend to kind of smooth out to around 6% or 7% earnings growth through cycles…for the S&P500, and then you put dividends on top of that, and that’s how you get the return of the S&P500 overtime. Our portfolio is not too much different than that, except the levers are a little bit different. So, our companies are growth companies, they don’t really pay out a lot of dividends, so we don’t get much of our returns from dividends, if at all. But, the earnings growth of our portfolio is significantly faster.” ~ Dan Davidowitz

[14:18] ~ “Every time there’s been a big technological transformation, it starts with hardware and then you have services and applications built on top of that hardware that eventually become the real value creating stuff…like the Amazons and Googles that were built on the broadband internet, we’re going to have something similar with generative AI. You’re going to have native Gen AI businesses, and also generative AI add-ons to existing businesses that are going to be value creative. Polen Capital is looking more toward that later group. We want to be part of the services and applications that have long-term, durable recurring revenue that will last a long time…but we are not looking to play the cyclical hardware so to speak.” ~ Dan Davidowitz

Links

• Dan Davidowitz on LinkedIn
• Polen Capital
• “Spoonman” by Soundgarden

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Disclosure(s)

Wealth Management services are offered by Orion Portfolio Solutions, LLC d/b/a Brinker Capital Investments a registered investment advisor. Orion Portfolio Solutions, LLC is a wholly owned subsidiary of Orion Advisor Solutions, Inc. (“Orion”)

The CFA® is a globally respected, graduate-level investment credential established in 1962 and awarded by CFA Institute — the largest global association of investment professionals. To learn more about the CFA charter, visit www.cfainstitute.org. 

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