Stefan Ioannou, Ph.D., is Analyst of Cormark Securities Inc. Dr. Ioannou is a mining engineer and holds a Ph.D. in economic geology from the University of Toronto. He joined Cormark in December 2016, working in equity research for 13 years with Haywood Securities — base metals analyst since 2006. Prior to that, Dr. Ioannou worked as an exploration geologist in Nevada and throughout the Canadian Shield.
In this 1,303 word follow up to Dr. Ioannou’s 2,882 word November 29, 2019 interview, the well respected global mining expert updates investors looking for guidance in the COVID 19 global pandemic.
“…Worth mentioning is that while we have seen base metal prices fall drastically in the wake of COVID-19, which has prompted investors to focus on said weakness, operating cost factors, in particular energy — fuel — and foreign exchange rate considerations are working in the favor of most miners.
So if you’re operating a mine anywhere outside the U.S. right now, any costs you’re incurring in local currency, namely labor, have recently dropped significantly in U.S. dollar terms. In Brazil, FX rate considerations are meaningfully offsetting the impact of copper price weakness.
With regard to fuel costs, which can account for 7% to 10% of a mine’s total operating cost, low oil prices are helping producers weather the pandemic for now. To put that into context, we talked about the AISC for the 90th centile of the copper curve being about $2.25 per pound right now.
In 2019, it was closer to $2.50 per pound, and again, that was on the back of higher fuel costs, stronger foreign currencies and other factors.”
Dr. Ioannou identifies his top investment danger for the current market:
“Balance sheet liquidity is key right now, as it positions a company to weather the storm.
If we look at copper right now, the metal’s price is testing the 90th centile of the industry’s AISC cost curve right now, which is about $2.25 per pound, which means 10% of the world’s copper mines are not economic right now and are essentially bleeding cash. In lieu of balance sheet strength, said producers face potential bankruptcy. ”
The global mining expert identifies his pick for current investment:
“A great example would be Lundin Mining (OTCMKTS:LUNMF), which has five mines. They’re all operating well in safe jurisdictions throughout the world, and they all have some sort of a modest near- to medium-term organic growth component to them.
The company has also demonstrated really good ability to prudently use its balance sheet…”
Get the complete picture by reading both recent interviews from Dr. Ioannou, exclusively in the Wall Street Transcript.
Eric Cinnamond, CFA, is Co-CEO and Portfolio Manager at Palm Valley Capital Management. He worked for First Union National Bank after entering the investment industry in 1993.
He joined the Evergreen Funds in 1996 as an analyst and co-manager of the Evergreen Small Cap Equity Income Fund. From 1998 to 2010, Mr. Cinnamond oversaw small-cap portfolios for Intrepid Capital Management.
From 2010 to 2016, Mr. Cinnamond managed the River Road Independent Value Fund. Mr. Cinnamond graduated from Stetson University in 1993 and received an MBA from the University of Florida.
Jayme C. Wiggins, CFA, is Co-CEO and Portfolio Manager at Palm Valley Capital Management. Mr. Wiggins is the former Chief Investment Officer and Portfolio Manager at Intrepid Capital Management.
He joined Intrepid in 2002 and managed the firm’s high yield portfolios and the Intrepid Income Fund from 2005 to 2008.
From 2010 to September 2018, Mr. Wiggins focused on the research and valuation of small-cap equity securities while managing the Intrepid Small Cap Fund — later renamed the Intrepid Endurance Fund.
He graduated summa cum laude from Stetson University, where he earned a BBA in finance. He earned his MBA, summa cum laude, from Columbia Business School in 2010.
In this 4,493 word interview, exclusively with the Wall Street Transcript, the two portfolio managers share their current market outlook and top stock picks.
“With relative-return investing, you could be down, you could lose half your money in a fund, where they could be down 45% and the market could be down 50%, and that’s a victory in their eyes.
But for private clients or a family office or advisers who sell to those types of individuals, it’s unacceptable. By refusing to overpay, we are attempting to protect capital when valuations are extremely expensive, which they have been since we launched in April 2019.
And I think as of last disclosure, we were in 94% cash.”
That leads to some interesting valuation opportunities for this portfolio managing duo:
“Spending extra on roads, bridges — toward infrastructure — has been below what is needed to maintain safe roads and bridges. And Gencor would definitely benefit from any stimulus package that includes infrastructure spending. And 95% of roads in the U.S. are paved with asphalt, and we don’t see that going away.
So it’s a very established business. And this is another thing we do: focus on companies that have been around a long time and have made it through many business cycles.”
Another interesting example is in the precious metals sector:
“So another name that we owned as of the last disclosure was A-Mark Precious Metals (NASDAQ:AMRK). They are the leading full-service precious metal company. They trade, they finance it, they store it, transport it.
They even fabricate gold and silver bullion and similar products. It’s a sub $60 million-market-cap firm. The float’s even smaller. So it’s not something most institutional investors can buy. A-Mark is one of the handful — and probably the largest authorized purchaser of coins from the U.S. Mint, which means they get mint-issued coins for the lowest premium and resell them to coin dealers and collectors, and they also have relationships with all the other major sovereign mints like Canadian, U.K., Australia, even China.
Interestingly, they have a 20%-plus equity stake in JM Bullion, which is one of the largest online precious metal retailers. I’m a customer at JM Bullion. They just sent out an email late last week saying they were having their biggest sales day ever, and maybe even for two days in a row. So a lot of renewed interest in physical precious metals the last week or so…”
To get the full detail on these picks and many more, read the entire 4,493 word interview, exclusive in the Wall Street Transcript.
Stephen Duench, CFA, is Vice President and Portfolio Manager of AGF Investments Inc. As Vice President and Portfolio Manager, Stephen Duench is a key contributor to AGF’s quantitative investment platform, AGFiQ.
AGFiQ’s team approach is grounded in the belief that investment outcomes can be improved by assessing and targeting the factors that drive market returns. Mr. Duench is the lead Portfolio Manager of the AGFiQ Dividend Income Fund and AGF Canadian Large Cap Dividend Fund and is central to the creation and support of AGFiQ’s portfolio management tools, analysis and applications across both Canadian and global mandates.
He began his career with AGF as part of the Highstreet Investment Management team. Highstreet Asset Management Inc. is a wholly owned subsidiary of AGF Investments Inc. Mr. Duench earned an honors degree in financial mathematics from Wilfred Laurier University and is a CFA charterholder.
In this 2,563 word interview, exclusively with the Wall Street Transcript, Mr. Duench reveals the key operating principles for his portfolio management platform and details its market beating output.
“My entire career has been spent on the quantitative side of the business, so it’s very much my first language within investing. We have a very deep research team with more Ph.D.s than any other investment team in Canada.
We’re constantly looking to test the newest concepts with academic rigor and apply them into our investment processes.”
This lead to a real insight in December of 2019:
“So with respect to that, they are outperforming many of our Canadian counterparts quite handily this year.
The reason for that is largely what was at the time a very out-of-consensus call I made in December, and that was to sell out of all my energy E&P and energy integrated stocks.
While Bay Street and Wall Street sellside strategists seemed to be getting very bold on the energy sector in December, I was taking the exact opposite view.
The premise of that was that the relative return of energy into December was historically strong, driven near the end of the year by higher-risk stocks.
Historically, when you see significant strength, it’s usually a time to trim some profits. But also, at the time, there was an abundance of other opportunities forming in the market, specifically lower-volatility-type stocks…”
This has created the opportunity for the portfolio to re-center around high value, low cost stocks:
“In IT, I’ve been very busy the last few weeks and doing a lot of work on structurally sound, long-term IT names such as Microsoft (NASDAQ:MSFT) or Visa (NYSE:V) or Apple (NASDAQ:AAPL), for instance. These are all household names, but these are the types of names that have been producing and operating at a very high clip.
Much better than some others within the sector. Their earnings will likely be revised but so will the entire space, and I believe these sorts of stocks are on better footing for multiple years.
When their valuation profile comes back to certain levels, I have to make sure that I’m positioned correctly to take advantage of them.”
Get the complete picture from Mr. Duench by reading the 2,563 word interview, exclusively with the Wall Street Transcript.
Sudhir Nanda is a Portfolio Manager and the head of the Quantitative Equity Group for T. Rowe Price. He is President of the Investment Advisory Committees of the QM US Small-Cap Growth Equity, QM US Value Equity, QM US Small- and Mid-Cap Core Equity, and QM Global Equity Strategies.
He is a vice president and member of the Investment Advisory Committees for the Capital Appreciation, Diversified Mid-Cap Growth and Institutional Global Value Equity Strategies. In addition, he is a member of the U.S. Equity Steering Committee.
Dr. Nanda is a vice president of T. Rowe Price Group, Inc. He received a B.A. degree from St. Stephen’s College, Delhi; an MBA from Indian Institute of Management, Calcutta; and a Ph.D. from the University of Massachusetts.
In this 4,199 word interview, Dr. Nanda details his portfolio management philosophy and how it leads to his top picks.
“The process behind this is a very systematic process for picking stocks. Some people call it quantitative. I would call it systematic fundamental because all the metrics that are going into stock selection are fundamental metrics like price/earnings multiple, free cash flow yield, capex, return on equity. But it’s implemented in a very systematic manner.”
I can describe what exactly goes into deciding how to buy a stock. The most important characteristic we look for in a stock is its valuation. And we are doing two comparisons. One is comparing a stock’s valuation with its sector or industry, and the second is comparing it with all small-cap growth stocks. And within valuation, we pay more emphasis on cash flow metrics like free cash flow yield rather than on price to earnings or price to book multiples.”
One interesting pick in these volatile times is a health care drug trial company:
“I will highlight another health care company we own. It’s a company called PRA Health Sciences (NASDAQ:PRAH). And what PRA Health Sciences does is, it’s a contract research organization.
It’s got a global footprint. And really what a contract research organization is, if you’re a drug company and you’re testing a drug for trial, you do different phases of trials. A lot of the testing mechanics are contracted out or outsourced to these contract research organizations, and PRA Health Sciences is one of them.”
Get the complete details on this company, and many others like it by reading the entire 4,199 word interview with Dr. Nanda, exclusively in the Wall Street Transcript.
Steven Bleiberg is Managing Director and Portfolio Manager at Epoch Investment Partners, Inc. He is involved with the design and development of investment strategies and is a contributor to Epoch’s thought leadership.
Earlier, he was a portfolio manager at Legg Mason responsible for managing $7.5 billion in various asset allocation-based funds including Target Risk, Target Date and Dynamic Risk Management.
Prior to that, he was the head of investment strategy at Citigroup Asset Management and a portfolio manager at Credit Suisse Asset Management.
He is a co-author of Winning at Active Management: The Essential Roles of Culture, Philosophy and Technology. He received a bachelor’s degree from Harvard and a master’s degree from the Sloan School of Management at MIT, with a concentration in finance.
In this 3,678 word interview, exclusively with the Wall Street Transcript, Mr. Bleiberg reveals many of his top picks and the investment philosophy that determines them.
“…If you were going to go out and buy a business yourself to own 100% of it, how would you focus on it, or how would you make that decision, first, whether to do it and, second, how much to spend?
You would not look at what the accounting earnings are going to look like each year for the next 10 years. What you would want to know is: How much cash is it going to cost me out of pocket today to buy this business, and how much cash is going to flow into my pocket each year going forward?
That’s how you would analyze it. And to us, buying stocks, even though you’re not going to be buying the whole company, that’s still the right way to think about it because you’re trying to figure out what is this business worth to me as an owner.”
This leads Mr. Bleiberg to focus his stock picks on several high return strategies:
“So with the strategy, which we call Capital Reinvestment, we might like a company such as Visa (NYSE:V) or Mastercard (NYSE:MA) because they have very high margins.
If you think about their marginal cost — if I go to the store, and I charge something on my Visa card, they collect their fee as a percentage of what I spent at the store. But their marginal cost for processing that transaction is extremely low. I mean, this is all automated.
And so it’s a very high-margin business. So that’s what drives the high return on invested capital there.”
Get all the most important picks from Epoch Investment Partners by reading the entire 3,678 word interview, exclusively with the Wall Street Transcript.
In this excerpt from the complete 2,755 word interview with Dr. Kumaraguru Raja, he introduces two companies that are developing treatments for significant high profile infectious diseases:
Dr. Raja: Yes, it is interesting that you bring that up because the two companies I cover in the infectious disease space are SCYNEXIS (NASDAQ:SCYX) and Vaxart (NASDAQ:VXRT). SCYNEXIS is an antifungal company that is developing drugs for vulvovaginal candidiasis, and the other company I cover is Vaxart.
Vaxart’s focus has been to develop vaccines that can be taken orally compared to the vaccines right now in the market, like for example, the flu vaccine right now, you need to take an injection. So Vaxart is developing vaccines for flu as well as norovirus that can be taken orally.
They have recently announced that they are also developing a vaccine for coronavirus. I think as the coronavirus is in focus, people are paying a lot more attention to the innovation that is happening in the health care space. I think some of the companies have performed very well, especially the companies that are developing drugs targeting coronavirus, but overall, it also shows the importance with regard to the therapeutics that are being developed for various diseases where there is a significant unmet need.
TWST: If a company has something promising to specifically treat the coronavirus, are there any approaches it should take as it works with the FDA? There is certainly a lot of attention that might distract people or make it more difficult to come up with something under more pressure.
Dr. Raja: The focus has been on coronavirus especially because we have seen this happening over the past couple of months. The companies that are developing the drugs, they are in the early stages of development. Some of them are rushing to develop the drugs, but I think especially Vaxart has a different profile because, as I said, they are developing vaccines for various infectious diseases that can be taken as an oral formulation.
The advantage with oral formulation is that they also provide mucosal immune response, which is through the gastrointestinal tract and the respiratory tract. This is very important because coronavirus is primarily an infection of the respiratory tract. And I think this kind of differentiated approach will help in terms of developing vaccines for these diseases.
TWST: Of the companies you cover, have there been any concerns, as far as coronavirus, about the supply chain getting impacted or manufacturing impacted if it involves China?
Dr. Raja: Not in terms of the coverage universe I have. Most of the companies I cover do not even have commercial drug launches as yet. And most of the manufacturing is being done in the U.S. for these companies. But in terms of raw materials, we do not know yet how this is going to impact. There has been no impact as of now, and the companies have not provided guidance on any impact so far.
Read the entire 2,755 word interview, exclusively in the Wall Street Transcript, to get the complete picture from Dr. Raja.
Dr. Kumaraguru Raja is a Senior Biotech Analyst at Brookline Capital Markets. Previously, he was Vice President, Biotechnology Research at Noble Life Science Partners.
He started his equity research career in 2010 as a Senior Associate Analyst on the Citi Research biotechnology team. His expertise includes bottom-up scientific and financial analysis on companies across therapeutic areas and across a spectrum of market capitalizations.
He focuses on drug development, intellectual property, FDA and EMA regulations, reimbursement coverage and clinical science. He conducted postdoctoral research at Mayo Clinic on the epigenetic causes of cancer and at Los Angeles Biomedical Research Institute on the molecular mechanisms concerning the role of human bone marrow stem cells in normal and leukemic hematopoiesis.
He received a doctoral degree from Bowling Green State University and an MBA from University of California, San Diego.
In this 2,755 word interview, exclusively in the Wall Street Transcript, Dr. Raja reviews microcap biotech stocks for the ones that will survive and thrive, and therefore create multiple return opportunities for investors.
“One of the companies would be Atreca (NASDAQ:BCEL). This is a company that went public last year. What this company is doing is it samples the blood from cancer patients who respond to treatments, and then, they sequence the B cells of these patients to find antibodies that are specifically expressed in these patients.
And then, they try to see whether these antibodies are able to bind to the cancer tissue from other patients.
So they are trying to screen the immune system of cancer patients who respond to treatments to find new treatments, which will respond across different cancers.
They already have a candidate in the clinic. They are undergoing Phase I clinical trials this year. We will have more data from this company by the end of this year.”
“Another company would be Medicenna (OTCMKTS:MDNAF). This is a company that is focusing on leveraging cytokines to target cancers. They have a drug that targets IL-4. So IL-4 is a cytokine. The IL-4 receptor is expressed in a lot of brain cancers.
What Medicenna is doing is they have a drug that is conjugated to IL-4. This drug specifically binds to the cancer cells, which express the IL-4 receptor. And then, it introduces a toxin into these cancer cells so that only the cancer cells are killed. They have promising Phase II data. And this drug is expected to enter pivotal Phase III trials this year.
They also have a huge platform with a focus on cytokines. They also have an IL-2, which is in focus because Synthorx got acquired earlier. So they also have an IL-2, which is being developed. The focus is to increase the efficacy of the checkpoint inhibitor.”
Read the entire 2,755 word interview and get the many other top tier return opportunities identified by Dr. Kumaraguru Raja is a Senior Biotech Analyst at Brookline Capital Markets, exclusively in the Wall Street Transcript.
Jacob Johnson, CFA, is a Research Analyst at Stephens Inc. He is on the health care team following the life science tools and diagnostics space. In this 4,742 word interview, exclusively with the Wall Street Transcript, Mr. Johnson applies his research skills to a newly hot sector:
“…We’ve tried to dive into some of the themes we’re seeing in the space. And we’ve addressed three big ones that maybe we can run through: one, biologics and the bioprocessing space; two, the role of outsource manufacturing for pharma and pharma services; and then three, probably the most important growth driver for our current coverage, cell and gene therapy. Investors want exposure to these themes.”
Mr. Johnson neatly identifies the publicly traded companies that provide the equipment for the development of new drug therapies in the United States:
“Moving to the next theme, and I think probably the most compelling, is cell and gene therapy. And these are, in a sense, a biologic, but they’re growing so rapidly, and it’s such a large market, really can kind of consider them on their own.
And the excitement here is because cell and gene therapies have the potential to revolutionize cancer treatment and cure some debilitating and deadly diseases. There’s a significant amount of activity in the pipeline with 1,000-plus clinical trials associated with regenerative medicine but only about four commercially approved therapies in the U.S.
And so the outlook for growth and spending for these therapies is fairly significant. From a life science tools perspective, these therapies pose a number of logistical challenges as they require the collection, preservation, transportation and manipulation of human cells. That creates opportunities for a number of companies. And maybe we can hit on some of these, but that would include BioLife Solutions (NASDAQ:BLFS), Brooks Automation (NASDAQ:BRKS), Catalent (NYSE:CTLT), Cryoport (NASDAQ:CYRX), Repligen (NASDAQ:RGEN) and Bio-Techne (NASDAQ:TECH).
And we think the cell and gene therapy end market is really probably the most important growth driver for these names in our coverage list for the next one, three, five, 10 years. As I said earlier, these therapies use a person’s own cells or modified genes to allow a patient’s body to either fight a disease or alter defective cells.”
Get complete detail on these and many other drug development stocks, only in this 4,742 word interview, exclusively with the Wall Street Transcript.
Vincent Costa, CFA, is Manager of Global Quantitative Equities at Voya Investment Management. He is also a portfolio manager for the active quantitative and fundamental large-cap value strategies. He joined Voya Investment Management in 2006 as head of portfolio management for quantitative equity.
Peg DiOrio, CFA, is the Head of Quantitative Equity Portfolio Management at Voya Investment Management. She is also a portfolio manager for the active quantitative strategies. Earlier, she worked at Alliance Bernstein/Sanford C. Bernstein. She received an M.S. degree in applied mathematics, statistics and operations research from New York University.
In this 2,566 word interview, exclusive to the Wall Street Transcript, these two portfolio managers give an insightful analysis of their investment philosophies.
“The equity organization has about $50 billion in assets under management, of which roughly about $20 billion of that is in what we would call quantitative equities…We do both fundamental and quantitative investing on the equity front…
Fundamental equity strategies typically are built to outperform, on a relative basis, benchmarks by doing fundamental analysis on securities and companies and then building portfolios that are designed to outperform a given benchmark.
On the quantitative side, quantitative strategies are built to also outperform underlying benchmarks but do so using stock selection models, rather than individual security analysis. Those models will be used to decide which stocks we want to overweight or underweight in a given portfolio.”
Mr. Costa describes it this way:
“I think when building a quantitative portfolio, there’s a lot of the human element that goes into the design of the process that you build.
And so we’ve been fortunate here at Voya to have a strong fundamental equity team with us. The quant team kind of evolved out of our fundamental team, so we spend a lot of time upfront with our analysts when we’re building our stock selection models to understand what works and what doesn’t work in each of the sectors, and then in using those, the model that we build in portfolios, we do spend a lot of time also upfront, making sure we’ve got the right constraints in place so that, as Peg mentioned, we’re not going to be tilting toward one sector versus another.”
Get the rest of this 2,566 word interview in detail by reading it exclusively in the Wall Street Transcript.
Todd Griesbach is a Partner and Portfolio Manager at RMB Capital Management LLC. When he joined RMB Capital in 2011, he brought 13 years of experience in analyzing equity securities and managing portfolios for mutual funds, institutions and separately managed accounts.
Prior to RMB, Mr. Griesbach worked as an equity analyst in Chicago for Columbia Wanger Asset Management and Ariel Investments. While rooted in value investing, his investment philosophy has developed and grown over the years to more fully encompass a “growth at a reasonable price” style.
In this 3,316 word interview, exclusively found in the Wall Street Transcript, Mr. Griesbach reviews his portfolio construction formulas and reveals some investing insights for this market.
“The firm was formed back in 2005 by Richard M. Burridge, hence where the name of the company comes from, and it was formed as a wealth management firm. That’s really our core business: to provide good long-term advice to high net worth individuals, small foundations and other relationships.
And it’s always emanated from Dick Burridge’s personal investment philosophy in terms of how we build portfolios and how we manage money for clients, and that is very long-term-oriented, based on really high-quality investment strategies, with an idea of compounding our clients’ capital over a very long period of time. ”
“Dividend Growth has a very similar philosophy with the biggest difference being it invests in more mature companies that also grow their dividends over time, whereas Core Equity is more faster-growing companies that don’t necessarily have that dividend stream as part of their return component.”
“A good example from Dividend Growth would be American Tower (NYSE:AMT), which is one of our largest positions. American Tower owns the cell towers that all the telecom carriers put their equipment on to run their networks.
It’s technically organized as a REIT, real estate investment trust. It’s a great business model because each one of the carriers has realized that it just doesn’t make economic sense for them to actually go out there and build towers for themselves and put their equipment on the network, whereas if someone independently owns the towers, they can put multiple carriers’ equipment on the network and really create more attractive economics and a better return on invested capital.”
Get more information about this portfolio standout as well as many others by reading the entire 3,316 word interview, exclusively in the Wall Street Transcript.
