REQ Capital fund managers Adnan Hadzifendic and Oddbjörn Dybvad discuss their new book, "The Compounders," which profiles nine exceptional companies and the key factors behind their long-term success. The core principles are high-performing decentralized cultures and strong reinvestment engines, enabling these companies to effectively utilize both labor and capital. They emphasize the importance of a numbers-driven approach, significant insider ownership for long-term decision-making, and the use of free cash flow for strategic acquisitions. The discussion also explores the concept of durability, using the metaphor of a deep-rooted African tree to illustrate the fundamental downside protection offered by diversified business models. They also share insights into REQ's investment philosophy, emphasizing corporate governance, ownership, and the balance between valuation multiples and long-term growth potential.
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