Joe Van Cavage, CFA, is Vice President and Portfolio Manager of Intrepid Capital. Mr. Van Cavage joined Intrepid Capital in 2018. He is a co-lead portfolio manager of the Intrepid Endurance Fund and the separately managed Intrepid Small Cap portfolio. Mr. Van Cavage is also a member of the investment team responsible for the Intrepid Capital Fund, the Intrepid Disciplined Value Fund, and the separately managed Intrepid Balanced and Intrepid Disciplined Value portfolios.
Matt Parker, CFA, CPA, is Vice President and Portfolio Manager of Intrepid Capital. Mr. Parker joined Intrepid Capital in 2014. Mr. Parker is a co-lead portfolio manager of the Intrepid Endurance Fund and the separately managed Intrepid Endurance portfolio.
In their 4,206 word interview, exclusively with the Wall Street Transcript, these two up and coming investment advisors give out some of their top picks and the reasoning behind them.
“The next one we wanted to talk about was Burlington Stores (NYSE:BURL). Burlington Stores is a physical apparel and home retailer. They actually have almost no online presence. Despite that, the stock has been a wildly successful investment today. It’s up almost 10 times since their IPO in 2013.
We think Burlington was actually a screaming deal in the chaos of the coronavirus panic, and the stock has recovered considerably over the last few months.
But given the company’s business model and a long runway of self-help improvement initiatives, we still think at today’s price it’s a very attractive opportunity and potentially a core holding for us for a long time.
Burlington specifically is an off-price retailer and runs the business model very similar to T.J. Maxx (NYSE:TJX) and Ross Stores (NASDAQ:ROST).
The off-price model, which sources excess merchandise from vendors at attractive wholesale prices that it passes on to consumers, has two really attractive qualities.
First, it’s been a structural market share gainer against legacy department stores and home apparel companies due to just the general value proposition it offers to customers.
And second, it’s proven to be a very recession-resistant model, benefiting from increased traffic as consumers trade down from full-price stores during times of financial difficulty.”
The two asset managers recommend more stocks in the interview:
“Another business we like is called Acuity Brands (NYSE:AYI). They are the industry leader in commercial lighting. By lighting here, I’m referring to kind of the higher-end commercial and industrial-grade fixtures as opposed to kind of a simple light bulb that you might buy in a grocery store.
An example might be a street light or a light fixture that you find in a warehouse or a retail store.
It’s a very well-run and high-quality business. We think the key advantage for Acuity is its deep relationships with its agency network that’s critical for getting scale in this business.
As a result, Acuity has the highest margins and returns on capital in the industry. It generates a ton of free cash flow and also has a great balance sheet.
The big story in the lighting industry over the last five or 10 years was LED adoption.”
Read the entire 4,206 word interview to get the full detail, exclusively with the Wall Street Transcript.
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