James W. Gaul, CFA, is Senior Vice President and Portfolio Manager at Boston Advisors. As a member of the Institutional Equity Team, he is lead portfolio manager on the firm’s Small Cap Growth and Large Cap Core strategies.
Mr. Gaul has more than 20 years of industry-related experience, including investment banking, sales and trading, and investment management. Earlier, he was an institutional fixed income sales professional with Commerce Capital Markets, Inc. and Advest, Inc. He received a B.S. degree in investments from Babson College and an M.S. degree in investment management at Boston University’s Questrom School of Business.
In this 2,922 word interview, Mr. Gaul explains his firm’s idiosyncratic approach to picking stocks that will beat the market:
“…We employ, what we refer to as, a hybrid quantitative-qualitative approach. So our process starts with a proprietary quantitative model that we use to identify attractive candidates. This is a balanced model. We’re looking for well-rounded stocks.
Our model looks at a wide array of factors from valuation, earnings quality, growth and profitability, investor sentiment. We rank stocks on a decile system, so we rank them one through 10. Ones are the best, 10s are the worst, and we can buy stocks from the top three deciles.
Now, unlike most quantitative managers, who would then optimize a portfolio against the benchmark, the next step in our process is to apply qualitative or fundamental analysis at the company level so that we can meld the experience and context that the portfolio managers are able to provide into the rigor and discipline of the quantitative model.
So as we like to say, the portfolio managers are the optimizers.”
The current market poses an interesting situation for the firm:
“In the short term, while we see a slowing economy, we don’t see an imminent recession, and there may be outside influences on the U.S. yield curve right now that are exacerbating this interest rate move, specifically the existence and folly of negative interest rates in Europe.
But it is certainly a notable event when the yield curve inverts. And so it is something that we and the rest of the investing world are keeping an eye on.”
Get the complete picture from Mr. Gaul by reading the entire 2,922 word interview, only in the Wall Street Transcript.
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