Kevin Reevey is a Managing Director, Senior Research Analyst for D.A. Davidson & Co. covering banks headquartered in the Midwest. He joined D.A. Davidson in 2016 with almost 24 years of experience covering banks as an analyst on the buy side and sell side, and in investment banking. Prior to joining D.A. Davidson, he was a Managing Director with FSI Group, LLC, a Cincinnati-based asset management firm, and a First VP with Ryan Beck & Co.
Mr. Reevey began his career as an investment banker covering depository institutions working for Merrill Lynch, Advest and Sterling Financial Investment Group. He sits on the alumni board of the Harvard Business School. Previously, he has served on the boards of the Cincinnati Ballet, Cincinnati State Technical and Community College Foundation, ArtsWave and the Clifton Cultural Arts Center. Mr. Reevey holds an MBA from the Harvard Business School and a B.S. degree from New York University’s Stern School of Business.
In this 3,247 word interview exclusive to the Wall Street Transcript, Mr. Reevey identifies the “Best of the Best” bank stocks for investors and delivers a detailed analysis for their future prospects.
“The one bugaboo on the ag front is dairy, driven by the decline in class III milk prices, which has led to challenging financial times for dairy farmers and banks that lend to this segment. The U.S.-China trade war since June has shifted Chinese demand to other world ag suppliers as China has placed a 25% tariff on U.S. ag commodities, including dairy.
2019 is expected to be another challenging year for dairy farmers due to low class III milk prices, unresolved trade issues and softening collateral values — cattle and machinery.
The bright spot is that the Farm Service Agency — FSA — guarantee limits were recently increased to $1.75 million from $1.429 million with the passage of the Agricultural Improvement Act, which was signed into law on December 20, 2018. These higher limits should help mitigate credit losses for banks that lend to dairy farmers.”
To get the full analysis, read the entire 3,247 word interview, exclusive to the Wall Street Transcript.
Peter J. Winter is a Managing Director at Wedbush Securities, and prior to that, he was a senior analyst in BMO Capital Markets Corp.’s equity research group, covering regional and Texas banks. Prior to joining BMO Capital Markets, Mr. Winter was a senior analyst at Advest, Inc., an affiliate of AXA Financial, and CIBC World Markets.
His prior experience includes equity research positions at NatWest Markets and Paine Webber Inc. He began his career at Citibank in the private bank division. He was ranked first in earning estimate accuracy in 2018 and 2017 and third in 2016 and 2015 in StarMine. In addition, in 2008, he was ranked fifth out of 72 analysts by The Wall Street Journal for stock picking and in 2001 “Best on the Street Analysts Survey” for earnings accuracy among banks and S&Ls.
In this exclusive 2,406 word interview in the Wall Street Transcript, Mr. Winter identifies the trends that support his top bank portfolio picks:
“Bank balance sheets are stronger than they’ve ever been. Capital levels are at record levels. They have more liquidity. From a credit perspective, banks that barely made it through the financial crisis have new management teams, which addressed risk management controls. All the banks have de-risked since the financial crisis, exiting businesses that caused a lot of credit problems.
To your point on CCAR and DFAST, it has created a more stringent and disciplined underwriting approach that wasn’t there pre-crisis, and that makes me more confident banks are better positioned for an economic downturn.”
This view has generated some names for investors to pursue:
Assuming the economy slows but does not go into a recession, the names we like are Fifth Third (NASDAQ:FITB), Citizens Financial (NYSE:CFG) and KeyCorp (NYSE:KEY). ”
In order to get the full detail on the rationale behind picking these banks, along with additional picks and pans in the banking sector chosen by the award winning Peter Winter, read the entire 2,406 word interview, exclusive to the Wall Street Transcript.
Brady Gailey, CFA, joined Keefe, Bruyette & Woods, Inc. in 2007, working in the firm’s Atlanta office, and is currently a Managing Director responsible for equity research coverage of roughly 35 regional banks in the Southeastern and Southwestern United States, with a focus specifically on Georgia, Florida, North Carolina, Texas, Oklahoma and Arkansas.
Prior to joining Keefe, Bruyette & Woods, Inc., he spent four years at Silverton Bank/Silverton Capital Corp., where he was an investment banker advising Southeastern community banks on M&A and trust preferred offerings. He received a degree in corporate finance from the University of Mississippi School of Business Administration.
He also earned his designation as a Chartered Financial Analyst from the CFA Institute in 2007. He has been a guest on CNBC’s “Closing Bell” and has been quoted in newspapers worldwide and in such publications as The Wall Street Journal, Financial Times, Barron’s, American Banker, Atlanta Journal Constitution, Forbes and other various business journals.
In this 2,329 word interview, Mr. Gailey details his top picks and reasoning for them:
“One of our top picks is Synovus Bank (NYSE:SNV) out of Georgia. It announced and closed an acquisition of FCB down in Florida recently, and that has been a stock that is trading inexpensively on both tangible book and earnings. The legacy of Synovus is a great franchise with a good core deposit base, and it has done a great job of increasing profitability through operating leverage. We really like Synovus here.
We like Independent Bank (NASDAQ:IBTX) in Texas. That is another very conservative management team with high insider ownership, and it is trading very inexpensively on earnings. So we like that one.
CenterState (NASDAQ:CSFL) in Florida is another top idea with a great funding base and good organic growth around 10%. They are one of the best acquirers in the Southeast, having done multiple deals that were priced and executed on well. Those three are probably our top picks.”
Get this rest of the exclusive 2,329 word interview with the Keefe, Bruyette & Woods analyst in the Wall Street Transcript.
J. Jeffrey Auxier is President of Auxier Asset Management LLC and Founder of the Auxier Focus Fund. Prior to forming Auxier Asset Management in 1998, Mr. Auxier spent 16 years at Smith Barney — formerly Foster Marshall American Express, then Shearson — where he was on the Portfolio Management Advisory Board and the Chairman’s Council and was Senior Vice President of Investments and Senior Portfolio Management Director.
Mr. Auxier graduated with honors from the University of Oregon with a degree in finance and an emphasis on accounting. Mr. Auxier and his family choose to live far from the influence of Wall Street, on a hazelnut farm just outside of Portland, Oregon.
In this 3,938 word interview exclusive to the Wall Street Transcript, Mr. Auxier details his investment stance and current top picks for his investors.
“Our biggest position has been UnitedHealth (NYSE:UNH) since 2010. Our original basis is around $40, and that’s up, like $275. But we really like CVS (NYSE:CVS). We actually had Aetna, and then it was bought by CVS, and then with Express Scripts, that was bought out by Cigna (NYSE:CI). So we know that space fairly well.
And right now, if you look at CVS, it’s basically trading about nine times earnings for arguably one of the leading health care service providers. ”
He has reservations about some hot sectors:
“…My fear is that the cloud has been over-invested in right now. I think too much money has already gone into that. The capital spending in that space has been running now $40 billion, $50 billion, $60 billion over the last couple of years. So I think it could end up like fiber optic. It’s a great thing, but we tend to overdo it, especially when the money has been as cheap as it’s been.”
Get all the details on J. Jeffrey Auxier’s top portfolio picks and his insight into the 2019 market in the complete 3,938 word interview, only in the Wall Street Transcript.
Nancy Prial, CFA, is Co-Chief Executive Officer and Senior Portfolio Manager at Essex Investment Management Company. She is the portfolio manager for the micro, small and smid growth strategies, leading an all-women investment team. Earlier, she worked at Burridge Growth Partners as the Chief Investment Officer and Senior Vice President responsible for the smid and small-cap growth strategies. The Essex Small Cap Growth Strategy was launched and developed by Ms. Prial in 2001 while at Burridge.
In this exclusive 4,113 word interview, Ms. Prial makes the case for the micro-caps at this point in the economic cycle:
“We think both small and microcap is an interesting part of the market to be in, but we really think that the opportunity today in microcap is quite, quite compelling. Part of that is the fact that the microcap stocks have underperformed their small-cap brethren really since 2013. And so we’ve had now five years of fairly significant underperformance by microcap, within a market where small cap frankly has done pretty well. And so we think that that’s something that’s likely to reverse.”
Ms. Prial identifies some examples of her portfolio:
“..These are companies that can be reasonably in control of their own destiny, where a new product or a new area can really change the trajectory of the growth company, but many times, that improvement in their business is not yet fully recognized in the price of a stock. I’m going to talk about a really microcap name here; it’s called Identiv Inc. (NASDAQ:INVE), about an $80 million-market-cap, California-based company, so it’s a U.S.-based company.”
Another portfolio favorite is detailed by Ms. Prial:
“I will mention one more microcap name that we think is particularly interesting right now. This one is a $95 million market cap, so again, very microcap. It’s a company called Tecogen (NASDAQ:TGEN), based in Massachusetts, so again a U.S.-based company. They’ve actually been around for a very long time.
They basically sell co-generation and chiller products.”
Read the entire 4,113 word interview to get the full investment rationale from Nancy Prial, Co-Chief Executive Officer and Senior Portfolio Manager at Essex Investment Management Company.
James Morton is Chief Investment Officer and a Portfolio Manager at Santa Lucia Asset Management Ltd. He has extensive expertise in recovering and small-cap companies, as well as emerging markets. Mr. Morton’s career in the investment industry began in 1985, and he was a subadviser to Mackenzie Cundill between 1996 and 2018.
He is an accomplished author, editor and investment columnist. Mr. Morton holds a degree in law from Trinity Hall, Cambridge University, and an M.A. in third-world economics as well as an MBA from Stanford University.
In this extensive and exclusive 6,835 word interview, James Morton discusses the Asian economic forecast and the stocks that will benefit.
“I think it’s interesting to comment on the dynamics in the political environment in the Asian part of the world compared to the U.S., North America and Europe. This will be quite a lively year — 2019 — since about 80% of the people in Asia who actually get to vote will be voting in the first half of the year. The most important of course being India, but Indonesia too. Also, Thailand looks like they’re finally going to have an election. And this has the potential to make a difference.”
This leads to some interesting picks.
“I’d like to start with West China Cement (HKG:2233). We like this industry because it’s been a story over the last couple of years of consolidation of market share within a circumscribed geographic area where cement plants compete. Consolidation has been driven by government policy to get companies to reduce pollution. That has been a big focus for the cement industry, and partly because of that, the government has not been pushing the industry so hard on pricing because they want them to invest in clean technology and upgrade their operations, and of course, that investment process caused smaller, less efficient, highly polluting plants to fall by the wayside. That led to significant market share concentration, with the result that margins in the industry have risen and the gross profit per ton is now in some places at the highest levels we’ve seen in recent history.”
To get the complete picture on this portfolio pick and many others from James Morton, read the entire 6,835 word interview in the Wall Street Transcript.
Peter H. Havens, Chairman, founded Baldwin Management, LLC in 1999 after being a member of the board of directors and Executive Vice President of The Bryn Mawr Trust Company. Previously, he organized and operated the family office of Kewanee Enterprises. He received a bachelor’s degree from Harvard College and an MBA from Columbia Business School.
In this exclusive 3,215 word interview in the Wall Street Transcript, Peter Havens runs down the list of his favorite stocks and gives the detail on why investors should take notice:
“The first one is Constellation Brands (NYSE:STZ). They’re one of the largest beverage companies in the world. Most people would know them for their beer brands. They are the exclusive importer of Modelo and Corona, two very popular Mexican brands they bring into the United States. They also have a wine business, which ranges from very inexpensive wines to some rather expensive wines.
And most recently, what has set them apart from the typical beverage business is they made a major investment in a company called Canopy Growth (NYSE:CGC), which is one of the largest of the marijuana growers in the world. They invested $4 billion in that to take a significant minority interest in the company with the right to expand, to take control of the company over the next few years.
Recently, the company reported their third-quarter earnings, and while they beat the Street on earnings and revenues, they guided down for the fourth quarter, primarily because of some softness in their less expensive wines and because of interest expenses on their Canopy Growth investment. The stock got hit pretty badly. Now trades at about $160 a share — that’s off from $227 a share not too terribly long ago. And so we think this is a terrific opportunity. The company is in good shape.”
To get all the rest of Peter Haven’s portfolio picks, read the entire 3,215 word interview in the Wall Street Transcript.
Frances E. Tuite, CFA, is a Portfolio Manager at Fairpointe Capital, LLC. She is part of the Investment Team, co-Portfolio Manager for the ESG Equity Strategy, and is responsible for investment research for both the ESG Equity and Mid-Cap Equity Strategies. In addition, she manages the 1837 LP long/short equity fund, which she founded in 2000.
Earlier, Ms. Tuite managed the 1837 Fund at RMB Capital and at Talon Asset Management — under the name Talon Opportunity Partners. Previously, she worked at Sirius Partners and Harris Associates as an analyst and portfolio manager, as a sellside research analyst at William Blair & Company, and as analyst and Director of Research at Johnson Investment Counsel. Earlier, she was employed at Procter & Gamble in their financial management training program.
Ms. Tuite received a BBA from the University of Cincinnati in finance and accounting and an MBA in finance and accountancy from Miami University in Oxford, Ohio. She passed the Certified Public Accountant examination. She is a member of the Chicago Finance Exchange, an organization for senior women leaders in finance, and a member of International Women Associates, which pursues global understanding and universal human rights. She is Chairman of the Steppenwolf’s Directors Circle and Board Chair for Recovery on Water, a nonprofit focused on breast cancer survivors.
In this exclusive 2,739 word interview, Ms. Tuite describes how her portfolio integrates ESG and high return stock picks:
“…The firm employs a bottom-up, valuation-based approach to investing. The ESG strategy that I’d like to focus on today really integrates that philosophy with analysis regarding ESG factors. ESG stands for environmental, social and governance. We integrate our investment process by evaluating companies on those criteria as well as looking at fundamentals. We have an internally focused research process that we use in the ESG strategy that combines the two.”
An example:
“A name that we added at the end of Q4 2018 is a company called Agilent Technologies (NYSE:A). They are in the health care sector and provide diagnostic and chemical analysis to life sciences and industrial companies. They also provide test equipment and consumables that help companies diagnose chemistries, whether it is an industrial, health care, academic or government agency.”
Ms.Tuite finds that other ESG investors are ignoring significant issues with many of their portfolio holdings:
“If you look at some of the offerings for ESG strategies, a lot of them are large-cap-focused and very diversified portfolios. Some of the companies we don’t really think are great ESG companies. If you look at a Facebook (NASDAQ:FB) or Amazon (NASDAQ:AMZN) that are part of these portfolios, they have some real issues. You have probably read the headlines regarding Facebook, but also look at Amazon. Its treatment of employees has caused a lot of unrest. Even Google (NASDAQ:GOOG) had some issues on the social side.”
To get more detail on this and many other ESG stock picks from Frances Tuite, read the entire 2,739 interview in the Wall Street Transcript.
Christopher Faber is a Portfolio Manager at RMB Capital. He joined the firm in June 2017. Earlier, he was at IronBridge Capital Management, L.P., where he was Co-Founder, President, Strategy Head and Lead Portfolio Manager. He also worked at HOLT Value Associates, L.P., where he was Founding Partner.
Jeffrey Madden is a Portfolio Manager at RMB Capital. He joined the firm in June 2017. Earlier, he worked at IronBridge Capital Management, L.P., where he was a portfolio manager, and at Accenture, where he was a retail management consultant.
In this exclusive 3,302 word interview with the Wall Street Transcript, Mr. Faber and Mr. Madden reveal their in-depth small cap research methodology and some stocks that satisfy their demanding criteria.
“In the small-cap strategy, we look for small companies that have the potential to become very large companies. We’re looking for companies that are smart and healthy. We define smart as companies that allocate capital consistent with shareholder value creation. It’s measured by our CFROI — cash flow return on investment — life cycle and value creation framework that we developed at our previous firm, HOLT. We assess and identify healthy companies as those with high management skills, strong corporate culture, adaptability, candor and knowledge-building culture…”
One example in their portfolio:
“West Pharmaceutical Services (NYSE:WST) is a health care equipment company that has been in business since 1923. The company has remained in business for nearly a century given its strong competitive position as a critical provider for both containment and delivery systems of complex biologics, and it has 70% market share. The company is a supplier to the top 75 pharmaceutical and biotech injectable companies. Moreover, there are significant switching costs, as the FDA requires the same delivery system used in clinical trials after a therapy is approved.”
To get greater detail on this and other portfolio stocks for Christopher Faber and Jeffrey Madden, read the complete 3,302 word interview in the Wall Street Transcript.
Gregg T. Abella is a Co-Principal and Portfolio Manager at Investment Partners Asset Management. After graduating from Bowdoin College in 1992 with degrees in both economics and Spanish, he began his professional career at Chubb & Son in the International Division of the Surety Credit Department handling Latin America and Europe.
Mr. Abella subsequently held a number of positions with Chubb, ultimately establishing and managing the Guaranty Department for its subsidiary, Chubb do Brasil, in Sao Paulo, Brazil. His multinational experience and credit analysis skills bring a unique global perspective to the firm’s clients. Mr. Abella has earned the Accredited Investment Fiduciary — AIF — professional designation from Fiduciary 360 and has received formal training in investment fiduciary responsibility. He joined Investment Partners in 1998.
In this exclusive 3,586 word interview with the Wall Street Transcript, Mr. Abella details some opportunistic investments that make sense in this chaotic market.
“One fund in particular that we’ve been interested in is called CBRE Clarion Global Real Estate fund. The symbol’s IGR. It is a fund that basically invests in REITs, and REITs as an asset class, last year, like many asset classes, had a negative return. I think the North American REIT Index was down about 5%, and the global index for REITs was down almost double that.
When you have an asset class that hasn’t worked very well, sometimes in the closed-end fund space, the gap between net asset value and share price gets even more out of whack.
So toward the end of the year, on top of the fact that the asset class wasn’t popular, you had tax selling and a couple of other events all coming together at once, and at one point, this fund traded at a 19% discount to its underlying assets. And since it is an asset class that tends to pay dividends, this fund in particular was paying out a distribution rate that’s between dividends and return of capital on a monthly basis — at an annualized rate of 9%.”
To get more detail on this and other interesting trades from Mr. Abella’s portfolio, read the entire 3,586 word interview in the Wall Street Transcript.
