Finding long-term winners, managing your mindset, and more.
Tom Slater is a partner and investment manager at Edinburgh-based investment firm Baillie Gifford. In this podcast, Motley Fool Chief Investment Officer Andy Cross talks with Slater about the keys to successful long-term investing.
Topics discussed include:
- Finding long-term winners.
- Managing your mindset.
- Culture and leadership.
- Allocation.
- E-commerce winners.
To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. When you’re ready to invest, check out this top 10 list of stocks to buy.
This podcast was recorded on Sept. 07, 2025.
Tom Slater: Inevitably, your most successful holding will become a big part of the portfolio, and you would be tempted to chip it away in the name of risk control, but that goes against the structure of returns. It is those small number of big winners that matter.
Mac Greer: That was Tom Slater, head of US equities at Baillie Gifford. I’m Motley Fool producer Mac Greer. Now, the Motley Fool, we love learning from successful investors. This week, Motley Fool Chief Investment Officer Andy Cross talks with Tom Slater about finding long term winners and navigating short term volatility.
Andy Cross: Hi, Fools. Welcome to another Motley Fool conversation. I’m Andy Cross. Joining me today is Tom Slater, Tom is head of US Equities at Baillie Gifford, where he is a partner, a co manager of the US Equity Growth Fund, and Scottish Mortgage Investment Trust, a footsie 100 listed company that really, frankly, has nothing to do with Scotland or mortgages, Tom. Welcome, and thank you for joining us here at The Motley Fool.
Tom Slater: Thank you so much for having me.
Andy Cross: We have so much alignment around our investing approach, so I’m really looking forward to digging in to here. We’ll get to the markets and stocks in a second, Tom, but I do want to start with that philosophy a bit because the approaches between your investment approach and the Motley Fools investment approach around long term investing really resonate. I really want you to share your investment approach, your time horizon, when you look at investing over five and ten years and the focus on innovation and transformation technologies.
Tom Slater: Yeah, well, to make it really simple in the first instance, our aim is to find the world’s most exceptional growth companies and own them for long periods of time. It’s simple, but it’s not easy. Peeling back the layers on that a little bit we spend our time looking at companies and thinking what might go right, not what might go wrong. In an industry that is full of skeptics and people picking holes in arguments, we think it’s important to think critically, but in the context of the upside, how much can we make if we’re right about this? We’re looking for businesses which can grow to many multiples of their current size. We think the world’s greatest businesses are just about always underestimated and we think returns and markets are really concentrated, that it’s not about what happens to the average company, but it’s about the contribution of a small number of really exceptional companies. Therefore, we should invest our time and effort in trying to identify those companies, trying to understand the leadership, what makes them tick, and trying to learn from those people about what’s going on in the world because they are building the future of the economy.
Andy Cross: Tom, when I think about Scottish mortgages, 100 year history, and you mentioned the few really driving the bulk of the returns, reminds me of the Henrik Bessenbinder study from Arizona State that showed that basically over very long periods of time, like 100 years, a few of the companies around 4% drive the bulk or if not all of the returns in the market. Now that’s very long time horizons. But even if you shorten those over, like ten year rolling periods, you do see that concentration and trying to find those exceptional winners. And I think that resonates with what you’re trying to do at Baillie Gifford.
Tom Slater: Yeah, you get this, we’re all taught that there is this normal distribution of returns that there’s the spread around an average and we don’t really have much hope as individual investors. But actually, if you extend the time frame, that isn’t true. Our average holding period in public markets is around ten years. When you get to that time horizon, you get a very different distribution of returns. As you say, there’s a small number that really matter over that time period. Once you take the veil away, once you see that, then I think it changes the nature of what you’re trying to do because it becomes much more important to try to find the companies capable of being those big winners. Then where you do find them, the second really difficult task is that you just don’t interrupt the compounding. You’re not tempted to chip away at them if they become a big part of the portfolio, because inevitably, your most successful holding will become a big part of the portfolio, and you will be tempted to chip it away in the name of risk control. But that goes against the structure of returns. It is the small number of big winners that matter.
Andy Cross: Tom, finding those companies is one thing. You mentioned the real holding on is the real, I think, a lot of challenge with so many investors, especially in a hyper focused investing climate that is so short term. How do you build that discipline to be able to continue to hold those winners within a reasonable allocation strategy for those companies that have done so well, especially for investors who might have been building out positions over time, doing all the right things?
Tom Slater: Yeah, I think it is difficult. It is, as you say, it’s a discipline. What I find quite helpful is you’re tempted to look at reducing stocks that have gone up. But what I like to frame it through two questions. The first question is, has the opportunity for that company got bigger or smaller? And the second question is, has the likelihood of capitalizing on that opportunity got greater or less? And it’s only once you’ve answered those questions you can come to the issue of valuation risk. Has the stock got riskier? Is it more highly valued? Because it may well have got cheaper, even though it’s gone up. If I take Amazon, we’re just about coming up on our 20th anniversary of owning Amazon stock in Scottish mortgage. If you think about that original opportunity, it was in the book market in e-commerce and selling books and then media. Every time it’s gone up, we’ve been able to come back and answer the question. Has the opportunity got bigger? Yes. Has the likelihood of success increased, and it’s enabled us to hold that stock for 20 years.
Andy Cross: Tom, just building on that about Amazon, when you think about the legendary investment letter that Jeff Bezos wrote about it always being day one. When you look at technologies like this, do you always feel like it’s day one at Scottish Mortgage when you’re when you’re analyzing companies?
Tom Slater: No, I don’t think we’re always looking for day one. Amazon is an exceptional company in so many ways, and we’ve learned so much from it from Jeff Bezos and his approach to think about investment and about the world more broadly. But I don’t think it needs to be day one. Specifically, we’re investors in businesses, not investors in technologies. So we’re thinking about the business model. We think about the ability to grow revenues. We’re thinking about how profitable an opportunity might be. We’re not trying to predict whether a technology will or won’t work. But I think what he’s trying to capture with day one is around this idea of mindset about fighting against all of those things that slow companies down as they get bigger. How do you keep the pace of innovation? How do you stop creeping bureaucracy? How do you stop creeping inefficiency? Not day one in terms of, is it early, is it early technology, but, yes, you want special companies that can fight against those almost those facts of life, those tough realities that are faced with companies as they get larger.
Andy Cross: Tom, speaking of tough realities, the reality of investing, especially in long term and especially in innovative technology in companies that are literally changing the world like you all do. We do also at the Motley Fool in so many ways, is you do have the outside risk of the ups and downs and of that volatility. How do you manage your personal and your team, how do you coach your team on managing some of the emotions that come with the high flyers in those emotional times, and not just during COVID when there’s loads of money going into the markets ups and downs. But even just when you go through earnings reports, I know you have looked at and own Ferrari, for example, and they had a recent report that sent the stock down maybe 10%. How do you help guide and manage around that volatility around growth companies?
Tom Slater: I think what this speaks to is that in investing one of your own whist one of your worst enemies is yourself. Managing your own emotions, managing your own process to deal with that is really important. The starting point for me is just being upfront with people about what you’re trying to do. Scottish Mortgage Investment Trust is focused on trying to deliver its shareholders, long run capital appreciation. We’re very upfront with people that this will be volatile. Don’t judge us over short time frames. I pretty much own all the stocks today that I will own in a year’s time. There’s not a lot I can do if those stocks are out of favor over the next year there’s a lot of randomness in that. Don’t own these shares if you can’t stomach volatility, if you have a time horizon that’s shorter than that, if capital preservation is your key objective. You get the clients you deserve, you get the investors you deserve, be upfront with people and be transparent and very clear about what you’re doing. The consequence of that is that when you encounter the inevitable volatility, people don’t get immediately on your back saying, this isn’t what I signed up for. This isn’t what I expected. I think that’s really important as a starting point.
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