Growth Companies in Disguise

"Insurers, Davis said, were "growth companies in disguise"-growing like crazy but "people don't think of it that way." Electric utilities fit the same category in the 1950s. Much later, Davis's son found disguised growth opportunities in consumer companies in the 1980s and financial companies in the 1990s."

"falling rates favored paper assets and not brick, mortar, and baubles-Shelby populated Venture with financial stocks that had underachieved in the hard-asset prosperity of the 1970s. Besides being timely, bank shares were very affordable. They were selling at 10 times earnings, and their earnings were growing at a steady 12 to 15 percent. Banks' stodgy reputation caused investors to underrate their future prospects. This was a perfect setup for the latest Davis Double Play."

"Insurance companies enjoyed some terrific advantages, as compared to manufacturers. Insurers offered a product that never went out of style. They profited from investing their customers' money. They didn't require expensive factories or research labs. They didn't pollute. They were recession-resistant. During hard times, consumers delayed expensive purchases (houses, cars, appliances…"