TIP723: THE ART OF BUYING GROWTH COMPANIES FOR VALUE PRICES

W/ JIM ZIMMERMAN AND ABIGAIL ZIMMERMAN

22 May 2025

On today’s episode, Kyle Grieve chats with James and Abigail Zimmerman about the strength of growing and sustainable cash flowing businesses; the importance of strong balance sheets; how they navigate their circle of competence, and the steps they take to expand it; why simplicity is so important in an age of complexity, how they use cash as a boost, and not a drag on returns, and much more.

SUBSCRIBE

Subscribe through iTunes
Subscribe through Castbox
Subscribe through Spotify
Subscribe through Youtube

IN THIS EPISODE, YOU’LL LEARN:

  • How communities—public and private—can spark better investment ideas.
  • Why staying inside your circle of competence protects your downside.
  • How to tell if value drivers are simple or deceptively complex.
  • Why free cash flow yield is their north star metric.
  • How “Fort Knox” balance sheets help survive any market storm.
  • When to double down on winners.
  • Key signals that suggest a business can sustain high ROIC.
  • What truly shows management is aligned, not just insider ownership.
  • How an equity-bond lens helps compare all asset classes.
  • The hidden risks that make many retailers dangerous investments.
  • And so much more!

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:00] Kyle Grieve: Today’s guests have outperformed the S&P 500 for most of the last 19 years, all while holding a 20% cash position on average. Let that sink in for a minute. Outperformance and a hefty cash cushion, that’s incredibly rare. The father and daughter duo James and Abby Zimmerman of Lowell Capital have an investing strategy based on a simple but powerful idea, which is to focus on resilient and cash generating businesses that they understand deeply.

[00:00:25] Kyle Grieve: This means they actively search for companies out of cash flow today, not tomorrow. They want businesses as close to the center of their circle of competence as possible. They’re looking for overlooked businesses with Fort Knox balance sheets, which require minimal capital to maintain operations, all while factoring in growth.

[00:00:43] Kyle Grieve: We’ll explore their investing journey, starting with where they source ideas from popular investment idea factories such as the Valley Investors Club. We’ll examine how they use the equity bond framework to aid in their decision making. We’ll discuss their approach to keeping things simple, how they stay disciplined around portfolio construction, and some non-obvious signals that management is aligned with shareholders.

[00:01:04] Kyle Grieve: One of my favorite topics was how they navigate the delicate balance between growth and value. While many investors put themselves firmly in one camp, they’ve managed to play both sides of the pendulum in a very value accretive way, and their ideas just simply work. I recently came upon a tweet that showed the 30 best performing stocks in Canada over the last three years, and I was very impressed to see that Lowell Capital invested in three of them, and these three were in the top five of returns to boot.

[00:01:31] Kyle Grieve: You also learned how they use cash as a strategic tool to navigate uncertainty, reduce risk, and seize opportunities while competitors are forced to the sidelines. Let’s get right into this week’s chat with Jim and Abby Zimmerman and learn how to buy growth businesses at value prices.

[00:01:50] Intro: Since 2014 and through more than 180 million downloads, we’ve studied the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. Now for your host, Kyle Grieve.

[00:02:14] Kyle Grieve: Welcome to The Investor’s Podcast. I’m your host, Kyle Grieve, and today we welcome James Zimmerman and Abby Zimmerman from Lowell Capital onto the show. James, Abby, welcome to the podcast.

[00:02:24] Jim Zimmerman: Thanks for having us. Yeah, thank you very much for having us. Appreciate it. I really enjoy it.

[00:02:28] Kyle Grieve: So one thing that I found really interesting while reviewing your investor letters is just the frequency, which with you mentioned things such as The Value Investor Club, Sum Zero and MOI Global.

[00:02:38] Kyle Grieve: So I personally have used Value Investors Club before and have been really impressed with the quality of some of the writeups on there. So my question for you here for today is how has your strategy for generating ideas kind of evolved over the years?

[00:02:50] Abigail Zimmerman: So I would say, I mean, all of these websites have been genuinely really valuable resources for us over the years.

[00:02:58] Abigail Zimmerman: We read a lot of writeups on Value Investors Club and we read almost all of them, even the ones that may not make sense for us, it’s just part of our process. And I would say that nine times out of 10, they don’t make sense for us. And it doesn’t mean they’re not great ideas, it just means they’re not within our circle of competence.

HELP US OUT!

Help us reach new listeners by leaving us a rating and review on Apple Podcasts! It takes less than 30 seconds, and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it!

BOOKS AND RESOURCES

NEW TO THE SHOW?

SPONSORS

Support our free podcast by supporting our sponsors:

Disclosure: The Investor’s Podcast Network is an Amazon Associate. We may earn commission from qualifying purchases made through our affiliate links.

CONNECT WITH KYLE

CONNECT WITH JIM

CONNECT WITH ABBY

PROMOTIONS

Check out our latest offer for all The Investor’s Podcast Network listeners!

WSB + BFF + RWH Promotions

The Intrinsic Value Newsletter