Culture is not something that immediately springs to mind when assessing a company and its prospects for the future.

More often than not, we investors are scouring profit and loss statements, comparing financial ratios and (if we have the time and skill) constructing valuation models.

However, good culture is critical in a business; it takes a long time to build and is hard to maintain. And yet, it can take as little as one rogue employee to upset the delicate balance and ruin it completely.

This is something that Qiao Ma, portfolio manager for the Munro Global Growth Small and Mid-Cap Fund, is intimately aware of.

As Ma revealed, if she determines that the culture is wrong when conducting her due diligence of a company, despite everything else looking good, she is walking away.

No 'ifs'. No 'buts'. She's not investing in that company.

"When it’s the wrong culture, it’s 100% of the [investment] decision," she said. Culture is the ultimate forward-looking indicator of where a company is going. It does not matter, the past glory it was able to achieve. If you have the wrong culture, you have no space."

In this episode of The Rules of Investing, Livewire's Chris Conway learns more about Ma’s investment philosophy, how it has developed over the years, and her outlook for growth investing – particularly in the small and mid-cap space.

Ma also shares a handful of stocks she likes right now and the types of opportunities she is hunting for over the next 12 months.

Timecodes:

0:00 - Intro

0:47 - How Qiao Ma's investment philosophy has developed over time

3:33 - Value versus growth

3:58 - On working at Lehman Brothers during the GFC

5:57 - The best lessons from investment legend Peter Cooper: The importance of culture

9:13 - How much culture should play into investment decision-making

10:59 - Qiao's most memorable stock picks from her career

12:49 - The biggest surprises in markets from the last two years

14:38 - The outlook on growth for the next 12-24 months

17:57 - The major risks the Munro team is spending the most time debating

23:43 - The catalyst for small and mid caps to rebound

24:25 - A stock that can fund its own growth: JD Sports (LON: JD)

28:02 - Why earnings durability is so important

29:18 - A high-conviction stock pick for the year ahead: On Holding (NYSE: ONON)

30:31 - The Rules of Investing's 3 common questions

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Disclaimer: The information provided by Munro Partners is general information only and is not intended to include, or constitute as, financial product advice. The views held by Munro Partners are current at the time of recording and are subject to change. Every effort has been made to ensure that the material contained in this document is accurate at the time of publication. Market conditions may change which may impact the information contained in this document. This information has been prepared without taking account of the objectives, financial situation or needs of individuals. You should obtain independent advice from a licenced professional adviser before making any investment decision. Information about the Munro funds, including the product disclosure statements (PDS) for the Munro Funds is available at www.munropartners.com.au. Munro Partners is a corporate authorised representative of Munro Asset Management Limited, AFSL 480509.

2 killer growth stocks (and why culture is key to successful small caps)

The Rules of Investing

2 killer growth stocks (and why culture is key to successful small caps)