Mr. Sailer: I'm Vice President and Senior Portfolio Manager of Union Investment Management Group, which is the investment arm of Union Bank and Trust, a regional bank headquartered in Lincoln, Nebraska. The trust department is currently about 10 billion in assets and Union Investment Management Group is responsible for managing about 4 billion of those assets. I'm also the Manager of the Stratus Growth Fund, which is a mutual fund run-through Union Investment Advisors, a subsidiary of Union Bank and Trust.
Our equity philosophy is probably somewhere between what is traditionally defined as growth and value. We focus on owning strong, fundamentally sound companies trading at attractive valuations. We calculate intrinsic value with a long-term view usually derived from a discounted cash flow model, and we buy companies at an appropriate discount to that intrinsic value given its level of risk or uncertainty. The greater the uncertainty, the greater discount to its intrinsic value we would require before purchasing that stock.
TWST: It is difficult to determine what is value, what is growth in such markets that we've been experiencing. Tell us about your process and what specifically you do look for in potential holdings?
Mr. Sailer: We pay very little attention to whether something is classified as growth or value. We may find value in what is traditionally a growth stock and we often see some solid growth out of stocks that usually fall on the value side. All else being equal, we like to find companies that are growing faster than the economy. For example, we look for companies that are gaining market share versus their competitors or simply are in an attractive area of the market where growth is projected to be greater than general economic growth. Getting back to the other side of the equation, we want to make sure we're paying a fair price and getting into a stock at a nice discount to what we think the stock is worth.
With the volatility in the market over the past couple of years, prices can drastically move to the upside and downside, so a stock may become attractively valued much quicker than it normally might, and on the other hand, we may see a stock appreciate much faster than we expected. Typically we expect an idea to work out over years and it may end up working out over months.
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