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Jul 12 2023
Notes from the Road

2Q23 Notes from the Road

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Notes from the Road

This quarter our team visited companies domestically in New York, Nebraska, Ohio, Michigan, Massachusetts, Illinois, Colorado, Washington DC, Pennsylvania, and Georgia. Globally, the team traveled to Australia, New Zealand, China, Hong Kong, Mexico, France, the Nordics, Japan, United Kingdom, and India.

Amy Hone, VP of Compliance & Operations, as well as Deputy Chief Compliance Officer, joined the Research team in a trip to Japan. The Research team included Amy Sunderland, Spencer “Speen” Hackett, Sam Gardiner, Tyler Glauser, and Daniel Xu. Amy split her time between the two tracks of meetings and was wearing her Compliance hat as she reviewed our research process. She shares some of her thoughts below, along with comments from the group.

As part of our due diligence efforts & forensic testing, Jeff Vincent, CCO, and I occasionally sit in on research meetings or calls. For several years, I have been trying to arrange my schedule to participate in a research trip and was finally able to join Amy S, Speen, Tyler, Sam & Daniel in Tokyo.   Since this was my first trip to Japan, I was eager to take it all in – the work, the culture, the camaraderie, and the food.

Japan is a beautiful country that is extremely clean; I expected it to be clean, based on what I’d learned before visiting the country, but I wasn’t expecting to see this level of cleanliness. I appreciated the culture of respect for nature and community as I witnessed all ages tidying up private & public spaces. I was pleasantly surprised by the amount of green space in Tokyo; Japan protects one-seventh of its land surface in parks.  The majority of the Japanese people were well dressed and professional, with styles that were generally more casual than I was expecting. Shopping centers and malls appeared busy and well-staffed. Tourism seems to be picking up post Covid. Finally, Japan is full of amazing food, from Japanese BBQ, sushi, and ramen. Even the pastry chefs were out to impress.

I’ve always appreciated and admired the amount of time and effort the Research team puts into research, but I now have a newfound level of respect and awe after seeing firsthand the meeting prep, the questioning, the rigor of back-to-back-to-back meetings, the depth of discussions in between meetings and the friendship and fun.  Our clients would be proud. 

Our Research support team is amazing. I appreciated and was impressed by the packets Cheryl Farr put together. These research packets include all the current Duponts (our internal snap shot of a company’s financial statements), recent reporting, our historic write ups, and meeting details including company contacts and a full agenda for the two tracks.  These packets were accessed and referred to in every meeting.

I was impressed with the planning of the schedule, the logistics of getting around, and the efficiency of travel. We had hired a set of vans to help us navigate to our meetings and they were really comfortable and nice. Traveling by van felt just as efficient as traveling by public transit; given our meeting locations were relatively close to each other.

In meetings, I saw that sometimes it is hard to get an answer to a specific question due to the language barrier and/or knowledge barrier of the interpreter or the management team. I was impressed when two of our team members could step in to help the translators, using their own language skills. Our analysts are skilled at rephrasing their questions in multiple ways to help overcome any potential gaps in information shared. Our analysts are also experienced enough with Japanese management teams to understand that responses that sometimes lacked enthusiasm may be simply due to a culture of being humble and honest.

After our meetings, the team would take a quick informal poll, we call our “gut feeling” check, to capture the sentiment and tone of each meeting. These ratings are followed up by further diligence but allow us to prioritize the additional work to be done when back in the office.  The Peter Lynch quote about finding one good company for every ten you research certainly held true on this trip. 

Of the meetings I joined, I was intrigued by a retail shopping concept based on thrifting and new designers in a high-end boutique model. Stores are attractive, efficient, clean, and organized, which was nearly the opposite of my assumptions about thrift-store shopping in the US. I also enjoyed meeting the management team of an IT Services company with cloud computing services. They take a proactive approach on mentoring and promoting women, and they offer employees a flexible work schedule.

As part of my due diligence, I was assessing the risk of companies sharing insider information.  I also assessing whether our questioning could lead to receiving insider information. While I was visiting, I also had an opportunity to meet with local partners, including our legal counsel. It was an honor to travel with my Research colleagues, to see the quality of work they do, and to experience the Japanese culture.