Rafael Resendes is the Co-Founder of The Applied Finance Group, LTD., a Founding Managing Director of Toreador Research and Trading, and a Founding Managing Member of AFGI. His detailed and thorough investing methodology has yielded some counter-intuitive portfolio positions that have consistently outperformed the market.
One such example is this home run chip stock. “For instance, we purchased the AI chip-maker NVIDIA (NASDAQ:NVDA) at around $14 a share at the end of 2011…We continued to hold it all the way with a p/e over 100.”
Mr. Resendes syndicates his team’s stock picking process in a variety of platforms. “We’re very excited to provide the AFGI 50 to investment houses via direct model delivery at a fraction of the price of most separately managed account — SMA — products, with considerable additional benefits to our clients. We created an RIA specializing in portfolio management services to consult and deliver this product from a stock list into a full turnkey portfolio research product. Since AFG launched the list, the product has outpaced the S&P 500 by approximately 122 bps annually.”
For his customers, the investing methodology avoids the duplication of risk: “…for instance, Home Depot (NYSE:HD) and Lowe’s (NYSE:LOW), those stocks’ prices are predominantly driven by the same underlying macroeconomic conditions. We don’t want to own both because, essentially, we are just doubling our bet on that one aspect of the sector.”
Another top pick is from the beaten down REIT sector: “Host Hotels (NYSE:HST) is a relatively new addition to the portfolio because REITs were broken out as a separate sector within the GICS classifications last year. Number one, Host showed up as one of the more attractively priced REITs in the universe. And as we broke down its business, what we found is that its cash flows, for the most part, were supported through business expenditures as opposed to individual retail expenditures. ”
Yet another contrarian investment is in the retail sector: “Target (NYSE:TGT) happens to be in one of those areas investors don’t want to touch right now. Yet you think about the retail environment, there is no arguing that Amazon (NASDAQ:AMZN) has built a fantastic business, but it would be naive to think that sophisticated brick-and-mortar retailers such as Target and Wal-Mart (NYSE:WMT) do not have a unique set of advantages that can battle an Amazon.”
For more of Mr. Resendes’ top picks and details on his investing methodology, read the entire interview at the Wall Street Transcript.