ESG Portfolio Manager Sees Value in New Stock Picks for 2019

January 7, 2019

Matthew D. Gershuny is the Director of Research and lead Portfolio Manager of the Parnassus Mid Cap Fund at Parnassus Investments. He joined Parnassus Investments in 2006 after serving as a Parnassus research intern.

Before joining the firm, Mr. Gershuny was a Vice President of Equity Research at Cowen and Company — formerly SG Cowen Securities Corporation. Prior to that, he held various equity research and asset management positions at UBS Securities. Mr. Gershuny received his bachelor’s degree in philosophy from Cornell University and his master’s degree in business administration from the University of Michigan.

In this exclusive 3,252 word interview in the Wall Street Transcript, Mr. Gershuny details the unique perspective his firm brings to the stock picking process:

“…We are and have been — since 1984 — a responsible investment management company, which means that we strive for both principles and performance and fully integrate fundamental and ESG research into our process.”

The portfolio development process is long and detailed plunge into detail:

“We have a very deep process that we employ to get to that high-quality, high-conviction list of businesses. And we have an extensive protocol where we look at four main factors, which are relevancy, moat, management and ESG factors to determine quality. Then, we look at valuation in terms of a three-year IRR — internal rate of return — and consider the range of outcomes.

I should also mention that we have a long-term investment horizon. We plan to hold our investments for at least three years, and we think that gives us a good advantage in the market because many of our peers are holding stocks for a shorter amount of time. When you focus on high quality, it’s important to have a long-term investment horizon.”

One example is Xylem (NYSE:XYL):

“We also really like the pace of innovation and technology adoption that’s happening in the municipal water and wastewater vertical. Xylem has a great innovation strategy. In addition to that, they have a lot of competitive advantages because their scale as a pure-play water technology company is almost two times larger than the number two and three players in the space, which are Danaher (NYSE:DHR) and Siemens (OTCMKTS:SIEGY).”

Get more of the ESG specialist portfolio manager’s top picks for 2019 by reading the entire 3,252 word interview in the Wall Street Transcript.