Christian Ledoux, CFA, is Director of Equity Investments at CAPTRUST. He is based out of the San Antonio, Texas, location and joined CAPTRUST from South Texas Money Management in 2019. He specializes in equity research and portfolio management.

Earlier, he was Chief Investment Officer for South Texas Money Management. He received a degree in business economics from the University of California at Santa Barbara.

In this 3,075 word interview, exclusively in the Wall Street Transcript, Mr. Ledoux reveals the top picks from his firm and where 2020 will end up for the market:

“…We’ve just recently bought is SmileDirectClub (NASDAQ:SDC). SmileDirectClub is a competitor to Invisalign, which is the maker of clear teeth aligners, and we bought SmileDirectClub because it fits our growth criteria, which is improving growth profile. And that means that they’ve been a grower, but they’ve got something going on in their business that is making it grow even faster.

And what they’ve done in a nutshell is they’ve democratized the fixing of teeth.”

The company growth rate is powered by distribution expansion:

“…They recently signed a deal with Walmart (NYSE:WMT) to add a scanning service within the Walmart facility so that people that are interested, they can go right in and have their teeth examined and then give them a tray to send home…They also have deals with CVS (NYSE:CVS) and Walgreens (NASDAQ:WBA)…”

Mr. Ledoux combines this growth investment parameter with yield on dividend paying securities:

“On the equity side, the yield on our portfolio is about 50 basis points higher than the S&P 500 right now, and it’s because we have an emphasis toward value stocks that pay higher dividends.

And that’s been helpful to our client base, in that they’re able to get an equal amount of current yield out of their stock portfolio as they are from their bond portfolio.”

Get the complete picture of this 3,075 word interview by reading it in its entirety, only at the Wall Street Transcript.

 

Jason Wulff, CFA, is a Portfolio Manager and joined Eagle Asset Management, Inc., an affiliate of Carillon Tower Advisers, in 2015. He is Lead Portfolio Manager for the Eagle SMID Cap ESG Select Strategy and SMID Cap Strategy and Portfolio Co-Manager for the Small Cap Strategy.

Mr. Wulff has 19 years of investment and financial industry experience and previously worked alongside members of his current Eagle investment team at Sentinel Asset Management.

In this exclusive 2,530 word interview, Mr. Wulff reveals the core components of his investment strategy:

“It’s remarkable with all this talk going on in the environment, we’re increasingly having management teams come and ask us about our perspectives on diversity, on executive compensation and on sustainability. And we think that’s where real value is being created, and we’re pretty excited about that opportunity.”

Cobining the E,S,G strategy with a positive cash flow filter results in above average returns:

“In the small-cap universe, we know there’s a lot of nonearners. I mean, almost 40% of the index doesn’t generate profits, doesn’t generate free cash flow.

In tech and other areas that I focus on, there’s very little discernment between those companies that actually are generating sustainable cash flows and those that do not.

And we continue to see a lot of opportunities of high-quality businesses that are growing, that are trading at reasonable valuations, whether that be a 4% or 5% free cash flow yield, which in our minds is attractive to most other investment opportunities.”

One example is this small financial institution:

“Columbia Bank (NASDAQ:COLB) — it is an extremely high-quality bank, based in the Pacific Northwest. If you look at their dividend returns, including specials and regular, it’s over 5%…”

Get the complete 2,530 word interview with star portfolio manager Jason Wulff, only in the Wall Street Transcript.

Brian T. Velie is a Director and Senior Equity Analyst at Capital One Securities, Inc. He joined the firm in June 2008. Before joining Capital One Securities, Mr. Velie was employed as a cost engineer by the Northrop Grumman Corporation and before that as a project engineer by the Procter & Gamble Company.

Mr. Velie received his B.S. in electrical engineering with honors from the State University of New York-Buffalo and an MBA in finance from Tulane University.

In this 2,560 word interview, exclusive to the Wall Street Transcript, Mr. Velie analyzes the oil & gas production sector and reveals the winning strategies for contrarian investors.

“I’m one of three covering analysts, and together, we cover a total of about 50 public E&Ps.

Our team has been together, the three of us, for seven years in the same group. And I like to think that we publish consistent research with consistent methods with our valuations that provides a good relative comparison for companies and have done so for a long period of time from the same group.”

The analyst looks over several “hot spot” stocks in the sector:

“For the past several years, the Permian has obviously been the hot spot where most all of the incremental activity has been seen. And companies with core Permian acreage that are executing well have largely outperformed those in other basins, I would say.

That has recently taken a little bit of a turn. There have been companies that perhaps downspaced too tightly and started to see some pretty adverse impacts from parent-child relationships for wells drilled too close together.”

Debt levels are squeezing stock upside:

“The first thing when I think about risk, leverage I keep mentioning. It’s key. It’s always a concern. Because prices have been so weak for so long, you can’t just look at a leverage ratio like net debt to EBITDA. It used to be if you were greater than three or four times, well, that was a red flag. Now anything over three times or near three times, it’s of concern.”

Get the full detail on all of Brian Velie’s picks by reading the entire 2,560 word interview, only available in the Wall Street Transcript.

 

Dave Harden is Chief Executive Officer and Chief Investment Officer of Summit Global Investments. A graduate of Boston College, B.A., and Boston University, M.S.C.S., Mr. Harden has established himself as an expert in investment technology and quantitative research.

In this 3,839 word interview, exclusively in the Wall Street Transcript, Mr. Harden reveals his “special sauce” in developing his award winning portfolios.

“We like to buy outstanding companies with the least amount of downside surprises in the delivery of high risk-adjusted returns. We are a boutique asset investment firm in the sense that we have very specialized, highly experienced individuals here, so a lot of CFAs — over 80% of the firm is CFA — as well as an in-house General Counsel and Chief Compliance Officer.

We just won two awards from the Institutional Asset Management Awards for 2019. We were awarded the Active U.S. Large Cap Strategy of the Year for the SGI U.S. Large Cap Equity Strategy and the ESG Strategy of the Year for our SGI Global Equity Strategy.”

Several quantitative factors are involved in asset selection, however risk is one major one:

“Risk is managed throughout all our processes. For example, we also use multiple risk covariance matrices. Most shops out there today, if they even use a risk covariance matrix, only use one, and we use multiple, and that’s very important because risk covariances have weaknesses.

Understanding those weaknesses and utilizing multiple matrices allows us to have a better, more robust suggested universe of what to buy and what to sell and ultimately manage risk better. We are the only one that I know of that does that.”

This discipline leads to some interesting portfolio decisions:

“…One of our top holdings is Walmart. Now this is a large company with a lot of U.S. consumer exposure. But it is a global player in the sense that it receives probably on average about 30% to 40% of its sales from international markets. The reality here is that Walmart has done a very good job. They were late to the online game after Amazon (NASDAQ:AMZN). But its online sales have been growing. Actually, they’ve been growing at about 30% a year.

An interesting thing about Walmart and its online growth is that it does well if the market actually goes down. ”

Get all the top picks from this award winning portfolio manager in the entire 3,839 word interview, exclusively in the Wall Street Transcript.

Anthony Minopoli is President and Chief Investment Officer of Knights of Columbus Asset Advisors. Mr. Minopoli joined the Knights of Columbus in 2005 and is responsible for the day-to-day management of Knights of Columbus Asset Advisors — KoCAA — General Account investment portfolio and mutual fund strategies.

Mr. Minopoli is also responsible for overseeing the internal investment staff and the fixed income and preferred stock investment strategies. In his role as CIO, Mr. Minopoli provides oversight for the investment managers in the KoCAA defined benefit pension plan, defined contribution plan and charitable assets, all of which are externally managed.

In this 4,163 word interview, exclusively found in the Wall Street Transcript, Mr. Minopoli explains how his Catholic charity mandate changes the portfolio management equation.

“We focus on screening out companies that are involved in contraceptives, abortion, embryonic stem cell research, human cloning, pornography and for-profit health care that pays for any of those aforementioned things.

And then, when you get into the U.S. Conference of Catholic Bishops guidelines deeper, they also screen for companies that are involved in weapons of mass destruction, munitions makers, things like that.”

Mr. Minopoli is managing risk throughout the economic cycle:

“We’re also focused on what happens with interest rates, and I’m an old-time bond guy. One of the things that has concerned me is that the interest rate environment in the U.S. and indeed around the world has been heavily managed by central banks.

And what nobody knows is what that looks like in an unwind scenario. Whether it’s Jerome Powell here in the U.S. or other Fed governors, or central bank presidents or governors around the world, they realize their economic policies can’t go from heavily managed to laissez faire in one quick step.

We may see a very long, iterative process to normalize monetary policy around the world. I think it has to be slow. I think it has to be steady. I’ve been very impressed at Powell’s mindset. ”

Read the complete 4,163 word interview with the United States Conference of Catholic Bishops compliant portfolio manager, Anthony Minopoli, exclusively in this issue of the Wall Street Transcript.

Collyn Gilbert is Managing Director of Keefe, Bruyette & Woods, Inc. Ms. Gilbert is currently a Managing Director with KBW/Stifel covering small- and mid-cap banks in the Northeast. Prior to joining KBW in 2013 when it was acquired by Stifel, Ms. Gilbert was Managing Director at Ryan Beck & Co., covering regional banks throughout the Northeast.

In this 2,912 word interview, exclusively in the Wall Street Transcript, Ms. Gilbert makes a case for her top picks in 2020.

Her picks are very interest rate sensitive:  “The movements in the yield curve and in interest rates are really a heavy, heavy factor in how banks and, in particular, my universe of smid banks perform.”

New York State has an additional set of challenges:

“This was a particular setback for the NYC real estate market, given the large concentration of rent-stabilized properties in NYC and the interconnectedness these properties have with the overall strength of the real estate market in NYC.

These new laws have eroded the return profile for the property owner, which then has eroded the desirability for this asset class, which then lowers demand and overall activity in the sector, and that has negatively impacted the overall loan activity for many of the banks in the NYC metro market.

The other law that has impacted the real estate market in NY state was the SALT deduction that was implemented in 2018. This tax limits the property tax deductibility, which has, again, negatively impacted the real estate profile for the higher-property-tax regions of NY state.”

An additional challenge is on the technology side:

“At the large-bank level it is, but there still seems to be a large gap there to what the community banks are doing. Many banks are still in the initial stages of rolling out mobile products, online account opening capabilities and just moving to more sophisticated data management platforms.

So while we are happy to see these banks implementing these technologies, sometimes you want to say, “You should have had done that five years ago.”

Get the complete picture on all the Keefe, Bruyette & Woods picks from this experienced analyst by reading the entire 2,912 word interview, exclusively in the Wall Street Transcript.

Paul D. Tobias is Chairman of mBank and Chairman and CEO of Mackinac Financial Corporation. Mr. Tobias has nearly 42 years of experience in the financial services and banking industries.

He was appointed as Chairman of mBank and Chairman and CEO of Mackinac Financial Corporation in December 2004 after structuring and leading the successful $30 million recapitalization of the company when it was known as North Country Bank and Trust.

Kelly W. George is President and Chief Executive Officer of mBank and President of Mackinac Financial Corporation. Mr. George has over 25 years of experience in the banking industry.

He joined mBank in 2003 as the Executive Vice President and Chief Lending Officer in charge of the regulatory and lending administration turnaround of the previously known North Country Bank and Trust.

After the successful rehabilitation of the bank and $30 million recapitalization, he was promoted to President and CEO of mBank and President of Mackinac Financial Corporation in 2006.

In this 3,355 word interview, exclusively in the Wall Street Transcript, these two experienced banking leaders detail what it takes to be successful in their market.

Mr. George elaborates on the financial technology side:  “We run most of our operations and our platform through Fiserv, which is our core processor. We have to work within that platform.

Fiserv is a large public fintech company servicing a large variety of financial institutions, and we think that platform is really going to continue to keep us on the front end of the tools that might be available or the new product and service trends to compete on the technology side.”

Mr. Tobias adds:

“Banking is a commodity. The products and services from bank to bank don’t vary greatly. The bottom line is it comes down to culture and people.

We have people who are part of the communities we operate in. We have developed a culture that is very community- and client- and employee-focused.”

Get the complete 3,355 word interview with Paul D. Tobias, Chairman of mBank and Chairman and CEO of Mackinac Financial Corporation, and Kelly W. George, President and Chief Executive Officer of mBank and President of Mackinac Financial Corporation, exclusively in the Wall Street Transcript.

 

David J. Nasca is President and Chief Executive Officer of Evans Bancorp, Inc. Mr. Nasca joined the board of directors of Evans Bancorp in September 2006 and subsequently joined the management team as President in December 2006, bringing more than 20 years of experience in the Western New York financial services and banking community. He was appointed CEO in April 2007.

In this 2,873 word interview, exclusively with the Wall Street Transcript, Mr. Nasca explores the upside for an upstate New York based banking institution:

“The company is diverse, but it is primarily a commercial banking institution. Additionally, approximately 30% of our revenue is noninterest income, with about half of that attributed to our insurance business.

Noninterest income also includes cash management products and employee benefits.

We recently announced a definitive merger agreement to acquire FSB Bancorp, the parent of Fairport Savings Bank, with $325 million in assets and five branches in the Rochester market. Expanding to Rochester had been prioritized as part of our strategic planning and is accelerated by this opportunity.”

The digital revolution in financial technology has profoundly affected smaller banking companies:

“What many banks are doing now is looking for companies they can partner with. And when I say partner, there are companies, like nCino and Sageworks, that will allow you to do a lot more digitally.

They have portals, so borrowers can come directly to the bank by delivering financials and information through a portal.

You can go into that portal, strip the information and then populate loan applications and credit write-ups. You can do some scoring from those systems. You can do underwriting through those systems.

So there is a lot of efficient digital that the smaller institutions are using, whether it’s consumer mortgage and home equity type of technology, commercial loan technology or deposit technology.

We are a midsize community bank with just under $1.5 billion in assets. You are seeing the ability starting to develop for banks like us to acquire or partner with new fintech companies. There is a lot of research being done, but I think it is in the early stages.”

Read the entire 2,872 word interview and get the complete picture, only in the Wall Street Transcript.

Scott Hood serves as the Chairman and Portfolio Manager of First Wilshire Securities Management Inc. He joined First Wilshire as an analyst in 1993, became the CEO in 2001 and the Chairman in 2019.

He is a board member of The Mount Wilson Observatory and The Sierra Madre Mountain Conservancy as well as a frequent contributor to news and conferences on small-cap investing. He is a chartered financial analyst and member of the CFA Institute.

Mr. Hood holds a Bachelor of Science from The Stern School of Business at New York University.

In this 3,683 word interview, Mr. Hood explains the deep value philosophy:

“Everybody here is deeply value-oriented and favoring the smaller-cap side, though maybe 10% to 20% of the ideas could be mid or large but where they have good value characteristics and are typically hated, real contrarian stocks that are down a lot for one reason or another. There’s always been an element of contrarian plays.”

The fund manager identifies some interesting picks:

“I’ll give one that’s a really good example of deep value. This would be even more value than usual. It’s called Gulf Island Fabrication (NASDAQ:GIFI). The company has been around a long time but is in what I would definitely call turnaround mode. It’s probably been on a decline for roughly 10 years.

What they do is fabrication of large complex steel structures like offshore drilling rigs and shipbuilding such as tugboats and ferries. The company has been on a decline. We’ve been following it for probably over five years. We finally felt earlier this year it was time to get in.

They changed management. They are very near going to cash flow breakeven. We like the new CEO. The backlog is at a record level, at least the best in about eight years. What’s neat is it’s trading near cash and below current assets less all liabilities, which is known as a net net stock; there are not many net net stocks out there. They also have some assets up for sale that could add to that cash. You don’t get many companies like that.

It’s also trading at 40% of book value.”

To get all the current top picks, read the entire 3,683 word interview with Mr. Hood, only in the Wall Street Transcript.

Jonathan Dash is the Founder and Chief Investment Officer at Dash Investments, Inc. As Chief Investment Officer, he is responsible for all the investment management and asset allocation decisions at the firm. He has over 25 years of experience in investment management.

Between 2006 and 2010, Mr. Dash was on the board of directors of Western Sizzlin Corporation, a 50-year-old franchising company with over $150 million in systemwide revenue. Mr. Dash graduated from the University of Southern California with a B.S. in finance and has also completed a Harvard Business School program on corporate restructuring, mergers and acquisitions.

In this 4,279 word interview, Mr. Dash explains how buying dinner for Warren Buffett 27 years ago pays off for this fund manager:

“That year, which was about close to 27 years ago, I flew out to the Berkshire Hathaway (NYSE:BRK.A) annual meeting just to learn more. I really gravitated toward Warren Buffett’s investment philosophy. It made a lot of sense. He was the best investor in the world. And that’s a good source from which to learn.

So I went to that annual meeting. I got to meet Warren Buffett that year, and I was able to speak to him for a while, asking him many questions. He was kind enough to let me pick up the tab for his dinner that year for him and his family. I think he just saw a young kid who was looking to him and was OK with me doing that.

It’s been a tradition for the last 27 years. I go to that annual meeting every year. I see Warren Buffett at the steakhouse every year. He lets me pick up the tab. And every year, I’ve been able to ask him a few questions to brush up on my investment strategy and get a lot of good book recommendations.

I learned a lot out of that and taking that investing approach, which is really buying a great business with a great management team at a great price. ”

This fund manager believes the times call for more equity exposure:

“I think a lot of people out there have too much exposure to fixed income. When you read academic books on this topic — how much stocks you should have in your portfolio versus bonds — there’s a formula based on your age. And if you’re 80 years old, you should have 60% or 70% in bonds and 30% in equities or something of the sort.

That might be OK in a normal interest rate environment, somewhere between 5% and 8%.

But we’re in a very abnormal environment.”

Read the complete 4,279 word interview and get all the stock recommendations from this Warren Buffett inspired fund manager.

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