Jason Lazarus, CFA, Vice President and Portfolio Manager of the Intrepid Income Fund, joined Intrepid Capital Management, Inc., in 2009. In his exclusive interview with the Wall Street Transcript, Mr. Lazarus details his portfolio picking philosophy as well as several top picks and the rationale for his purchase of that security.
“Intrepid has a long history applying fundamental value-based analysis to small-cap stocks in particular. Of course, there are a lot of managers that follow the same philosophy, but we think we’re truly unique in a few ways. First, we follow a strict absolute-return orientation, so we don’t use relative valuation metrics to value companies. We’ve got a very long-term focus. So that frees us from the need to be fully invested at all times. This basically means that if we can’t find an attractively priced security, the default will be cash or a T-bill.”
The inclusion of debt investing gives the money manager the opportunity to give his investors a significant current return as well as preserving upside potential. “…the process really extends nicely to high yield corporates, which have traditionally been an asset class with mispricings. Often, many small-cap stocks are also high yield companies simply because they’re smaller. Traditionally, we’ve been high yield investors on the fixed income side, although right now the asset class is very picked over in our opinion. Like the equity process, we’ve got a very flexible mandate. We can invest in a broad array of income-producing securities, including investment-grade, high yield, convertible bonds, preferred stock, dividend-paying equity.”
One example of this investment analysis is a high return, high yielding Florida real estate company.
“Consolidated-Tomoka Land Company (NYSEAMERICAN:CTO). It’s a Florida-based owner of office and retail income-producing properties across the U.S. It’s got roughly 2.1 million in square feet in retail and office space. And it’s concentrated in higher growth markets. The interesting thing about Consolidated is that it also owns about 8,000 acres of undeveloped land near I-95 in Daytona Beach, Florida, which it’s been monetizing over the past few years…management surprised us this year recently by securing some very attractive prices on a large portion of that land…”
To see many more examples, read the entire interview with Jason Lazarus in the Wall Street Transcript.
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