Gregory D. Padilla, CFA, is a Principal and Global Portfolio Manager at Aristotle Capital Management. Mr. Padilla is looking for long term investment themes: “I think a big problem is the short-termism in the markets today. Every company is being pushed to the limit to try and wring out every last cent of EPS. It’s hard for good management teams to settle in and make long-term strategic decisions. So we are looking for the rare companies that are thinking less about maximizing this quarter’s EPS and are more focused on the next three to five years and how they can optimize the business.”
Mr. Padilla is looking for companies anywhere on the globe that bring a large component of forward improvement to his portfolio. “Japan is a country that’s full of amazing businesses with innovative products that are trapped within these companies that exist to benefit society and not shareholders, but we are starting to see a cultural shift there. It’s becoming more in vogue to focus on shareholder returns, and it’s even shameful to have a low return on equity.”
One of Mr. Padilla’s recommendations includes a specific example of a stock that will benefit from a new strategic direction. “PPG (NYSE:PPG) is transitioning to a pure-play coatings company following the sale of its more cyclical chemical and glass-oriented businesses. In addition, they have significant aftermarket and maintenance work in the coatings business that generates a steady stream of income.”
To see the entire exclusive interview with Mr. Padilla of Aristotle Capital Management, read it here on the Wall Street Transcript.
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