Alexia Howard covers packaged food companies. She says for the traditional large packaged food companies, the themes are cost cutting, margin expansion and dealmaking. Ms. Howard says valuations are high right now, which is leading to concerns among investors. She is expecting more M&A in the industry. Near to medium term, she says there is real opportunity for margin expansion because of company cost-cutting potential.
Full interview available here.
Joe Edelstein covers the healthy living space. His coverage reflects a growing interest from consumers related to the health and wellness trend. He says this group can be a little more volatile, as trends can shift very quickly. Mr. Edelstein is currently very selective on a near-term basis, but believes that long term there are names that can outperform.
Full interview available here.
Scott Mushkin covers staples retailing and companies in the natural and organic industry. Mr. Mushkin says that while equities have performed well, business and revenue performance of companies has been subdued. He has a fairly negative outlook on the sector, as the environment is being marred by overbuilding, slack demand due to demographics, rising costs and tight labor markets.
Full interview available here.
Christopher D. Towle discusses Towle & Co. and the Towle Deep Value strategy. This strategy is focused on finding low price to sales or low enterprise value to sales and earnings power. According to Mr. Towle, a company with high revenue and a low market cap is a way to buy leverage in the public-equity space. In addition, Mr. Towle looks at businesses on a three-year time horizon to remove short-term noise and emotion. He finds opportunity in companies that are out of favor. Overall, Mr. Towle is focused on a company’s intrinsic value, what it can generate in three years and a 15% return on market value.
Full interview available here.
Gregory R. Lai discusses Affinity Investment Advisors, LLC and the Affinity Small Cap Core Fund. Mr. Lai combines the best of quantitative and qualitative analysis into a systematic investment approach. The goal is to identify companies with positive changes in fundamentals that can be bought at reasonable or inexpensive prices. In most cases, according to Mr. Lai, those changes in fundamentals will manifest in positive changes in earnings and revenue. In addition, he believes risk management is as important as finding great companies. Mr. Lai aims to be sector-neutral because emotional responses make it difficult to time sectors.
Full interview available here.
Erin Lash covers the consumer products space. She says valuations in the space have continued to trend higher over the last several months, driven by a number of factors which include the rotation into higher-quality names amid global economic uncertainty and the appetite for yield and strong shareholder returns. Ms. Lash says there’s also been a renewed optimism for M&A in the space. She shares which names she recommends and how they are attractive for the long term.
Full interview available here.
Daniel Lang discusses RS Investments and the RS Value Team. The team manages four strategies: a small-cap value, a midcap value, a large-cap value and a concentrated best-ideas fund. Due to his medical background, Dr. Lang leads the health care investment efforts across the strategies. According to Dr. Lang, the team’s definition of value investing is buying good businesses with strong management teams at a discount to the long-term intrinsic value. Dr. Lang strives to identify investments where the opportunity for value creation is underappreciated or mispriced. There are two key drivers of value creation that Dr. Lang looks for: increasing returns on invested capital in excess of the cost of capital and reinvesting cash into new assets at high rates of return. Specific to health care investing, Dr. Lang thinks it is important to view companies according to three criteria: how they will improve clinical outcomes, how they will improve access to care and how they will reduce costs.
Full interview available here.
Chris Lagan and Todd Solomon discuss Congress Asset Management Company, which is a family-run boutique firm. According to Mr. Lagan, being an independent organization is beneficial for investors because the firm answers to its clients and holds its clients’ investment objectives as the primary concern. Mr. Lagan and Mr. Solomon are growth investors who look for consistent earnings growth. They also focus on downside risks and the preservation of capital. In addition, Mr. Lagan and Mr. Solomon analyze if a company generates significant free cash flow and if it deploys it to the benefit of shareholders. While they do look at some quantitative measures, overall, a company’s management team has to have a clearly articulated growth strategy.
Full interview available here.
Thomas Kertsos discusses First Eagle Investment Management and the First Eagle Gold Fund. Through the fund, Mr. Kertsos aims to generate long-term real returns. When it comes to stock selection and capital allocation, Mr. Kertsos analyzes precious metals stocks on valuation, resilience, duration and cyclical upside. Mr. Kertsos does not speculate on the price of gold or make directional bets. Rather, he views gold as a potential hedge against extreme market outcomes. According to Mr. Kertsos, gold has maintained its purchasing power over the long term and is unique in that it can serve as a hedge against both inflationary and deflationary risks. Mr. Kertsos believes his view of gold and his focus on downside protection is what differentiates the fund.
Full interview available here.
Edward Lam discusses Somerset Capital Management LLP and its Dividend Growth Strategy. Mr. Lam is a long-only equity investor with a relatively conservative approach. He has a bias toward high-quality companies and a focus on quality growth. In addition, rather than just seeking dividends or income, Mr. Lam looks for dividend growth. By investing in a combination of earnings and dividend growth, Mr. Lam hopes to generate above-average returns over time. Another piece of Mr. Lam’s philosophy is having a different perspective on things from the general consensus. He believes that having his own views and being able to flush them out with thorough research adds value.
Full interview available here.
