Motley Fool Money
Interview with Tom Slater, Head of U.S. Equities at Baillie Gifford
September 7, 2025
Episode Overview
This episode features Andy Cross (Motley Fool Chief Investment Officer) interviewing Tom Slater, Head of U.S. Equities at Baillie Gifford and co-manager of the US Equity Growth Fund and Scottish Mortgage Investment Trust. The discussion centers on identifying and investing in long-term winners, the discipline of holding through volatility, investment philosophy, and allocation strategies. Tom emphasizes a philosophy focused on finding transformative, innovative companies and letting "big winners" compound over time.
Key Discussion Points & Insights
Investment Philosophy: Seeking Exceptional Growth Companies
- Tom Slater shares Baillie Gifford’s core philosophy is to discover the world’s most exceptional growth businesses and hold them long-term (01:39).
- They focus on what might go right vs. what might go wrong, contrary to the typical skepticism seen in finance.
- “We think returns and markets are really concentrated—it's not about what happens to the average company, but it's about the contribution of a small number of really exceptional companies.” — Tom Slater [01:39]
- Time horizon and return concentration: The best returns come from a handful of big winners, making it crucial to resist selling just to "control risk" in top positions (03:38).
- Reinforced by the Bessembinder study (Arizona State): Over long periods, ~4% of companies drive nearly all returns (02:59).
The Discipline of Holding — Fighting Against "Risk Control" Temptations
- Challenge: Investors feel pressure to trim winners for the sake of portfolio balance, but that interrupts the compounding effect (04:56).
- Tom’s process for holding:
- Has the opportunity for this company grown or shrunk?
- Has their chance of realizing that opportunity improved or worsened?
- Only then: Consider valuation risk.
- Example: Baillie Gifford’s 20-year history with Amazon—every time the stock rose, they evaluated whether the opportunity had expanded (05:52).
- “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? Yes. And it's able, this enabled us to hold that stock for 20 years.” — Tom Slater [06:56]
Business Models, Not Technology; "Day One" Mindset
- Not just about being early: It’s less about "Day One" technology and more about business model, scalable revenue, and keeping an innovative mindset (07:17).
- Day One at Amazon: A model for fighting bureaucracy and maintaining innovation, but not a requirement for all investments.
Volatility and Investor Psychology
- Managing volatility: Tom stresses accepting volatility as intrinsic to finding outsized winners; transparency with clients is essential (09:23).
- “You don't own these shares if you can't stomach volatility.” — Tom Slater [09:23]
- Investors must align their time horizons with the strategy (long-term capital appreciation).
Identifying Future Winners: What Matters Most
- Not about technical insight: Deep focus on company culture, the mission, sustainable edge, and leadership traits (11:08).
- Quantitative factors: Skin in the game, ownership, incentives.
- Intangibles: Founders' moral authority, decisiveness, and adaptability.
- Example: Amazon’s 1996 shareholder letter was more telling than product specifics in 2004.
- Founder-led companies:
- 80% of Tom’s portfolio is founder or family controlled. This brings longer timeframes and moral authority for difficult decisions (14:56).
- Example: Shopify’s founder decisively discontinued a delivery initiative to maintain focus, something harder for non-founder teams.
Reflections on Tesla & Founder Leadership
- Tesla investment since 2013: Tom credits success at Tesla to not just Elon Musk, but the strength of the broader management team (13:26).
- “When [Tesla] has been working and delivering at its most successful, it's because there's a broader team around Elon that have been helping with that delivery.” — Tom Slater [13:26]
- Importance of founder influence extends to other holdings (Meta, Nvidia, Shopify).
Allocation Strategy
- Go where the opportunities are; avoid artificial diversification:
- They do not allocate strictly by index weight, sector, or geography (18:07).
- Example: Baillie Gifford’s significant investments in China (Tencent, Baidu, Alibaba) resulted from independent assessment rather than index-following.
- Active share: Tom aims for a portfolio very different from the index; high active share is a natural result rather than an explicit target (19:50).
Excitement for the Next 20 Years: E-Commerce and Emerging Markets
- Key holdings: Mercado Libre (Latin America), SEA (Southeast Asia), Coupang (South Korea), PDD/Temu.
- Growth is just beginning in emerging markets, and these companies are also expanding into financial services (21:00).
- “These opportunities are completely undervalued relative to the next 20, 30 years of growth that's available.” — Tom Slater [22:17]
Notable Quotes & Memorable Moments
- “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.” — Tom Slater [01:39]
- “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.” — Tom Slater [01:39]
- “One of your worst enemies is yourself. Managing your own emotions, managing your own process to deal with that is really important.” — Tom Slater [09:23]
- “If I look at the portfolio, I think about 80% of it is founder led or family controlled.” — Tom Slater [14:56]
- “We don't start with what's our allocation to anything really. It's where do we see the biggest opportunities… and those will be our biggest holdings.” — Tom Slater [18:54]
Key Timestamps
- 00:05 — Opening insights on letting big winners drive returns
- 01:39 — Baillie Gifford’s long-term investing philosophy
- 03:38 — The myth of normal return distributions & power laws in investing
- 05:52 — The discipline and criteria for holding or trimming winners (Amazon example)
- 07:17 — Day One mindset and the importance of business models
- 09:23 — Managing volatility and aligning with the right investors
- 11:08 — What really matters in evaluating companies (focus on culture, leadership)
- 13:26 — Reflections on Elon Musk, Tesla, and the need for strong teams
- 14:56 — Value of founder-led companies (Shopify, Meta, etc.)
- 18:07 — Portfolio allocation: avoid artificial sector or region limits
- 19:50 — Active share and views on traditional financial metrics
- 21:00 — Favorite long-term growth opportunities: E-commerce platforms in emerging markets
Summary
This episode presents a deep dive into Tom Slater and Baillie Gifford's philosophy: focus relentlessly on finding transformational companies, hold on through volatility, and let "big winners" drive portfolio returns without succumbing to short-termism or artificial diversification. Success comes from understanding leadership and company culture, not predicting technology. Investors must know themselves—the stomach to handle volatility and the patience to allow compounding are essential. Emerging market e-commerce and founder-led businesses are among Tom’s highest-conviction ideas for the next decades.