Villere & Company Picks 2U (NASDAQ:TWOU) and other Hidden Gems for its Mutual Fund Portfolio

February 20, 2018

Lamar Villere, CFA, serves as Partner and Portfolio Manager at Villere & Co. Prior to this, Mr. Villere managed global private equities, hedge funds, and public equities. He is a member of the CFA Institute. He holds the Chartered Financial Analyst designation. Mr. Villere is a graduate of Washington & Lee and Vanderbilt University’s Owen Graduate School of Management.  In this exclusive interview with the Wall Street Transcript, Mr. Villere details his firm’s investment methodology and some top picks.

“Our turnover, or our average holding period, tends to be about five years. We will trim a stock as it runs up significantly so it does not represent too large of a percentage of the overall portfolio. If we think it is still an interesting opportunity we will buy more, but as far as adding and selling new names, we are careful when we do that. We don’t want to add a stock unless we feel really strongly about it and plan to hold it for a long time.”

The in-depth analysis from the Villere team leads to some little known gems.

“One that we have owned for a couple of years is a company called 2U (NASDAQ:TWOU). 2U is an online education company. They partner with graduate schools in the U.S. Although they have acquired an international nondegree business, the core business is to partner with U.S.-based graduate schools for online learning. Some people hear “online learning” and assume this is a little bit lower quality, but 2U partners with schools like Yale, Northwestern, UNC-Chapel Hill, Georgetown, etc. Those schools will offer fully online versions of graduate degrees…The beauty of this from 2U’s perspective is these are 10- to 15-year contracts generating very visible revenue streams.”

Another interesting portfolio pick from Lamar Villere is Axon (NASDAQ:AAXN).

“So if somebody comes in and says, “Hey, six months ago, a cop did this,” you have to be able to find what effectively is a needle in a haystack. So Axon  with its offering enables these police forces to completely outsource the management of all this data so that the data is searchable and easily found. It winds up being a great revenue source. You are not just paying them for the cameras, but you are paying an ongoing subscription fee for that service.”

For more picks from Lamar Villere and his colleagues, read the entire interview at the Wall Street Transcript.