Philip Fisher

Pioneering growth investing through deep qualitative research

Who He Is

Philip Fisher was a pioneering growth investor whose book "Common Stocks and Uncommon Profits" influenced generations of investors, including Warren Buffett. While Benjamin Graham focused on quantitative value, Fisher emphasized qualitative factors: management quality, competitive position, and growth potential.

Fisher ran his investment counseling firm for nearly seven decades, maintaining a small number of clients and an even smaller number of holdings. Truly understanding a company took years. Deep knowledge of a few excellent businesses beat superficial knowledge of many.

His approach required extensive research, including what he called "scuttlebutt" — gathering information from competitors, suppliers, customers, and former employees. This investigative work went far beyond reading financial statements.

Core Investment Philosophy

Fisher sought companies with outstanding growth potential driven by superior products, research capabilities, and management. He was willing to pay higher prices for quality because excellent businesses delivered superior long-term returns.

He emphasized holding for the long term. Fisher famously said there were only three reasons to sell: if the original analysis was wrong, if the company no longer met his criteria, or if a clearly better opportunity existed. Otherwise, he held through volatility.

Management quality mattered enormously. He looked for integrity, capability, and long-term orientation—managers who invested in the future, treated employees well, and communicated honestly with shareholders.

He focused on companies with structural advantages in their industries. Proprietary technology, strong research and development, effective sales organizations, and efficient operations created durable competitive positions.

Patterns He Focuses On

• Growth Potential — Fisher sought companies whose products or services addressed large, expanding markets. He looked for evidence that growth could continue for years, not just quarters.
• Research and Development Effectiveness — Strong R&D pipelines suggested continued innovation and future products. He wanted companies that invested in their own future rather than just harvesting current products.
• Sales Organization Strength — A superior sales force could maintain pricing power and customer relationships. This was a competitive advantage that did not appear on balance sheets but shaped outcomes.
• Profit Margin Trajectory — Fisher looked for companies maintaining or expanding margins as they grew. Declining margins during growth suggested competitive pressure or poor execution.
• Management Integrity — He assessed whether management communicated honestly, especially about problems. Leaders who admitted mistakes and explained challenges earned his trust.
• Long-Term Orientation — Fisher favored companies that invested for the future even when it meant lower short-term profits. This willingness to sacrifice immediate results for lasting advantage signaled quality thinking.

Example Companies

Motorola — Fisher invested in Motorola in 1955 and held for decades. He recognized the company's engineering culture and potential in electronics before these qualities were widely appreciated.

Texas Instruments — Another long-term holding where Fisher identified exceptional management and research capabilities. The company's focus on semiconductor innovation aligned with his growth criteria.

Dow Chemical — Fisher saw Dow's research-driven culture and strong market positions as indicators of lasting competitive advantage. He held through various market cycles.

Limitations and Criticisms

Fisher's qualitative approach requires exceptional judgment. Assessing management quality and growth potential involves subjective interpretation. Mistakes can be costly when paying premium prices for perceived quality.

The scuttlebutt method is time-intensive and impractical for most investors. Few have the network, access, or hours required for thorough investigative research.

Growth investing carries concentration risk. Fisher's portfolios held few positions, and a single mistake could significantly impact returns. This approach demands high conviction and tolerance for volatility.

Distinguishing genuine growth from temporary momentum is difficult. Many companies appear to have growth characteristics that later prove illusory.

What Modern Investors Can Learn

• Quality deserves a premium — Cheap can be expensive if the business is mediocre. Paying more for truly excellent companies often makes sense.
• Understand before you invest — Deep research creates conviction that survives volatility. Surface-level analysis leads to panic selling at the wrong time.
• Hold excellent businesses — Frequent trading destroys returns. When you find a great company, let time work in your favor.
• Evaluate management carefully — The people running a business matter as much as the business itself. Integrity and capability compound over time.
• Look for structural growth — Not all growth is equal. Seek companies with durable advantages, not just current momentum.