How Hyperion unearths rare but exceptional growth companies (plus two that pass their filters)

The structural forces that saw growth investing rise to the top after the GFC remain. COVID created a blip, but the world is returning to slow growth, low inflation and lower interest rates. That's the perspective of Jason Orthman, the Deputy Chief Investment Officer of Brisbane-based Hyperion Asset Management.

Orthman says that neither you, me, nor our grandchildren are likely to experience an environment like 2022, where rapid interest rate hikes rocked long-duration assets such as government bonds and growth equities.

"2022 was an incredibly unusual period. We've looked at markets over the last 250 years, and you haven't seen interest rates at the long end move quickly to that level over 250 years of data. We believe it's a one-in-250-year event," says Orthman.

Structural forces, including ageing populations and the rise of automation, will continue to create a disinflationary and low-growth world in the decades to come. This backdrop means that those rare companies that can grow at rates well ahead of GDP can provide investors with exceptional returns.

Orthman and the Hyperion team have a disciplined approach to finding these rare gems, starting with 12 structural growth trends, such as productivity, the shift towards artificial intelligence (AI), and banking and payments. These parts of the economy are likely to grow and present fertile ground for finding future blue-chip companies.

In this, the first episode of The Rules of Investing for 2024, Orthman speaks with Livewire's James Marlay about Hyperion's approach to growth investing, the wild ride of 2022 and the long-term opportunities the firm has identified.

Orthman also shares what he describes as 'one of the most important investments' the firm has ever made, what investors are missing about the Tesla (NASDAQ: TSLA) story and two companies he believes are poised for significant revenue growth over the next decade.

Chapters

• 0:00 - Introducing Jason Orthman
• 2:07 - Hyperion’s unique approach to growth investing
• 4:18 - Is Australia a good market for growth investors?
• 6:11 - Why Hyperion owns large companies in a small cap fund
• 9:15 - Taking Hyperion’s success to global equities
• 13:43 - Lessons from navigating a big drawdown in 2022
• 18:48 - Reflecting on the drawdown and tweaks to the investment process
• 20:09 - How to build conviction so you can be confident during volatility
• 22:28 - How portfolio management can improve your returns
• 26:48 - Why we are returning to a low growth, low inflation and low interest rate world
• 29:15 - Hyperion’s base case assumption for bond yields
• 32:42 - Three structural growth trends that will outperform broader economic growth
• 36:33 - ServiceNow (NASDAQ: NOW): A market leader with no credible competitor
• 38:24 - Hyperion’s most-important investment of all-time
• 40:22 - What do investors most often get wrong about Tesla?
• 42:45 - Two stocks with exceptional long-term growth outlooks

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Learn more about Hyperion

You can learn more about the philosophy, fees and performance of Hyperion’s funds by clicking on the fund profiles below.

Managed Fund

Hyperion Global Growth Companies Fund (Managed Fund)

Global Shares

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Managed Fund

Hyperion Small Growth Companies Fund

Australian Shares

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Managed Fund

Hyperion Australian Growth Companies Fund

Australian Shares

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