Inside MPPL’s Investment Approach
Investing is about more than reacting to markets. At MPPL Financial, it begins with understanding a client’s goals and building a disciplined investment process designed to pursue long-term returns while managing risk.
We sat down with Jesse Dunsmoor, CFA®, Portfolio Manager & VP Investments at MPPL Financial to discuss how MPPL approaches investing, the role of its Investment Committee and what clients can expect from a team that believes thoughtful research and patience matter.
What is at the heart of MPPL’s Investment Philosophy
Jesse: At the heart of our philosophy is a simple idea: we want to invest in assets where we believe future cash flows will be higher than what the market is currently pricing in.
We don’t believe markets are perfectly efficient. Prices can be influenced by emotion, short-term incentives, passive flows and other factors, which can create opportunities for investors willing to do their own research and take a longer-term view.
We invest like long-term owners. That means looking beyond the next quarter and understanding the underlying business, its industry and the long-term opportunity ahead.
Our investment process is designed to identify those opportunities while managing risk through a disciplined and adaptable framework. That approach is grounded in five principles that guide how we invest:
- Think Independently: We conduct our own research rather than simply following consensus.
- Invest for the Long Term: We look for businesses with durable growth potential and give compounding time to work.
- Manage Risk Deliberately: We evaluate downside before determining how much to invest.
- Challenge Our Thinking: Our Investment Committee provides an additional layer of review and perspective.
- Stay Client-First: Asset allocation begins with the client’s goals, needs and time horizon—not simply a benchmark.
How does that philosophy translate into the way you select investments?
Jesse: We take a top-down and bottom-up approach.
We start by looking at sectors and industries to understand where they are in their life cycle, what current and future demand looks like, and where we see attractive long-term opportunities. We then examine the value chain within those industries to determine where competitive advantages and potential constraints may create attractive economics.
From there, we analyze individual companies. We generally have a quality-growth bias, looking for businesses with growing end markets, sustainable competitive advantages, scalable products or services and the potential for increasing profitability and cash generation over time.
We then build our own valuation models rather than simply relying on Wall Street consensus estimates. Fundamentally, we want to understand what a business is worth and whether the market’s expectations are too optimistic or too pessimistic.
How do you think about risk when making investment decisions?
Jesse: We define risk differently than simply looking at short-term volatility. Ultimately, we think about risk as the potential for permanent loss of capital or failing to meet a client’s goals.
That perspective influences how we build portfolios and size individual positions.
We don’t size an investment based on how much upside we think it could generate. We first ask, “What happens if we’re wrong?” We assess the potential downside and then determine how much of that potential loss we’re willing to accept within the overall portfolio. That allows us to diversify enough to manage risk while maintaining enough concentration to make our best ideas meaningful.
We also believe in letting successful investments compound. If the fundamentals remain strong, we don’t want to automatically sell simply because a position has performed well. At the same time, we’re willing to reduce or exit an investment when the underlying thesis deteriorates or the valuation no longer makes sense.
Where does MPPL’s Investment Committee fit into that process?
Jesse: The MPPL Financial Investment Committee provides an important layer of oversight and perspective.
The investment team brings its research and conclusions to the committee, where those conclusions are challenged and the underlying data and assumptions are critically evaluated. The committee may identify potential biases or blind spots, introduce additional data or perspectives, and help ensure that we’re looking at an investment from multiple angles.
Our investment team includes professionals who hold the CFA® designation, as well as team members pursuing the designation. The rigor and breadth of the CFA curriculum reflect the team’s ongoing commitment to developing its investment knowledge and expertise.
The committee also plays an important role in establishing the framework for our investment strategies and making decisions about significant strategic changes as client needs evolve. So, it’s not simply one person making an investment decision. There’s a team conducting the research, a process for evaluating opportunities and an Investment Committee that challenges the thinking behind that process.
MPPL has developed its own investment strategies. Why is that important?
Jesse: We believe having our own investment strategies allows us to build a process around the way we believe markets work and the needs of our clients, rather than simply adopting a generic approach.
Our goal is to build repeatable research systems that can identify attractive long-term opportunities while remaining disciplined about risk.
That requires patience. We don’t have to act simply because the market is moving. We can wait for the fundamentals, valuation and market signals to align before acting.
And our process isn’t static. We continually evaluate our assumptions, our strategies and the needs of our clients and adapt when appropriate.
What do you think investors should understand about successful long-term investing?
Jesse: Compounding takes time.
One of the biggest challenges for investors is having the patience to allow successful businesses to compound over many years. That means being willing to look beyond short-term market noise and focus on the underlying drivers of long-term value.
We also believe investors need to be selective. You want enough diversification to manage risk, but you don’t necessarily want to own everything simply because it’s available. Active management can play an important role in identifying businesses with the potential to create significant long-term value.
Ultimately, our job is to do the research, manage risk and give those investments the time they need to work.
And our clients have access to the people doing that work. If they want to understand our thinking, review the data or talk through a unique situation, we’re available to them.
Jesse, thank you for sharing your insights on the MPPL Financial approach to investing