Randall Abramson, CFA, is a Co-Founder, President, CEO and Portfolio Manager at Trapeze Asset Management Inc., or TAMI. Mr. Abramson is also a Co-Founder, President and CEO, and a portfolio manager at TAMI’s affiliated investment dealer, Trapeze Capital Corp., or TCC. Ronald Steinhoff, CFA, is a Portfolio Manager with Trapeze Asset Management Inc., and conducts research and analysis for both TAMI and TCC. In their exclusive interview with the Wall Street Transcript, the two highly regarded money managers detail their investment philosophy and provide examples that illustrate their tremendous value based strategies.
The two experienced portfolio managers have also developed an “early warning system” to detect potential market failures. “After the Great Recession, we developed an economic composite and an indicator of momentum to help alert us to future recessions and bear markets…So we monitor these two macro tools regularly in case we need to raise cash, short the markets to hedge our long positions and alter the characteristics of our portfolio, like moving away from cyclicals. In the meantime, in periods like today, where the alerts aren’t flashing, we remain comfortable being fully invested where we can find the bottom-up investment opportunities.”
One such example is large cap tech stalwart Oracle (NYSE:ORCL). “Oracle stock has kind of gone nowhere over the last few years, hovering around the $40 to $50 level. Now we believe they’re at a key inflection point with their cloud business. We’re expecting to see margins increase, and that’s really because the cloud is approaching 20% of total revenue.”
Another fertile area is in the gold mining sector. Some examples include some well known gold miners: “But unlike some of their brethren, like the Barricks (NYSE:ABX) and the Newmonts (NYSE:NEM) of the world that tend to trade at a premium to their net asset values, we think both can — Kinross (NYSE:KGC) and Goldcorp (NYSE:GG) — actually trade at discounts to their net asset values. And gold itself trading around just shy of $1,300 at the moment, whereas the average producer has a cost just shy of, call it, $1,100, we see upside to the gold price as well.”
For a complete view of the investment picks from Randall Abramson and Ronald Steinhoff, read the entire interview at the Wall Street Transcript.
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