Keith Dicker discusses IceCap Asset Management Ltd. Mr. Dicker is a global macro manager, and due to his offshore background, he does not have a home-country bias. His investment approach focuses on absolute returns and avoiding downside risk. To achieve this, Mr. Dicker allocates across equities, fixed income, currencies, cash and commodities. This gives him the opportunity to be flexible with his allocations. Looking ahead, Mr. Dicker sees a big bubble in fixed income, especially in sovereign debt. Anticipating a break in the bond market, Mr. Dicker is positive on equities right now, and he performs analysis to determine which of the 10 key sectors is most sensitive to the bond market.
Full interview available here.
Greg Dean discusses the Cambridge Global Asset Management division of CI Investments Inc. Mr. Dean describes his investment process as following the cash. He also spends a lot of time looking at a company’s business-model quality. Rather than focus on net income or earnings, Mr. Dean likes to analyze cash flow. This allows for a standard comparison across businesses and geographies, and less of a margin for error. He also likes management teams with a track record of strong capital allocation. He finds this process particularly helpful when investing in growth-oriented stocks.
Full interview available here.
Curtis J. Holden discusses Tanglewood Wealth Management, Inc. Tanglewood is a fee-only adviser. Mr. Holden believes this is an advantage because there isn’t any pressure to sell products and the firm is an independent company. The primary focus of the firm is to look out for its clients’ total financial health. Instead of designing a one-size-fits-all strategy, Mr. Holden offers six different approaches to help find the right fit for each client’s stage of life and comfort level with risk and volatility. Tanglewood is a disciplined company and tries to instill that same discipline in its clients. Mr. Holden’s hope is that providing clients with an investment approach where they can feel comfortable will encourage them to stay focused for the long term.
Full interview available here.
Nathan Moser discusses Pax World Investments and the Pax Small Cap Fund. Mr. Moser believes he can produce superior risk-adjusted returns over time through active management and investing in high-quality, attractively valued companies. His strategy also focuses on downside risk. Risk is one of the key barriers to the small-cap space for investors, so Mr. Moser seeks to mitigate risk as much as possible. Mr. Moser’s overall process starts with a quantitative multifactor screen to narrow the investable universe. From there, he conducts fundamental research alongside analysis of a company’s environmental, social and governance factors, which adds insight into the quality of a company and its management team and helps to identify risk.
Full interview available here.
Christopher P. Brown Jr. discusses his firm’s Total Return Fund, which is a U.S.-focused multisector fixed income fund. One of the core tenets of the strategy is to have a higher tracking error or higher volatility relative to the index, which is the Bloomberg Barclays U.S. Aggregate Bond index. Mr. Brown believes that core fixed income is now and in the future will be a very important part of the broader asset allocation, despite concerns about rising rates.
Full interview available here.
Brian Gilmartin discusses Trinity Asset Management Inc. Mr. Gilmartin mainly focuses on sector rotation. His investment style combines a bottom-up and top-down process. While he will try to get a feel for where the economy is headed and how consumers are doing, 80% to 90% of his time is spent identifying sectors and stocks through fundamentals. Due to the changing political environment in the U.S., Mr. Gilmartin believes that financials, large-cap tech, telecom and possibly health care are sectors that may benefit.
Full interview available here.
Brett Rabatin covers the Texas and West Coast bank group. Mr. Rabatin looks for names that are either growing or going through a long-term improvement in core operations and profitability. He says that over the intermediate term there could be more upside from the space, but there’s fair argument that a lot of the benefit of things happening is already baked into the valuations. He says investors should be looking for where there are catalysts for earnings to be better than expected or for valuations to improve.
Full interview available here.
Aaron James Deer discusses his midcap Western bank coverage. Mr. Deer says the recent surge for banks is sustainable as long as political outcomes match up with expectations. He says that generally speaking, his earning estimates are rising, which stems from the upward shift of the yield curve and rising expectations for additional rate hikes by the Federal Reserve.
Full interview available here.
President Peter Tuz of Chase Investment Counsel Corporation says Zoetis Inc (NYSE:ZTS) is being driven by emerging markets as well as aquaculture, and the company should deliver 10% to 12% earnings growth over the next couple of years.
It is the world’s leading animal health company. It is a pharmaceutical company for animals. The firm has about half its business in the U.S. and the other half in the rest of world. No country other than the United States is more than 5% of the business. The second-largest market is Brazil.
In terms of what kind of animals it serves, about 60% are farm animals — cattle, swine, poultry — and included in that are fish. About 40% are pets, which basically means dogs, cats and horses…
What’s driving the company really are two main factors, an improving standard of living around the world, where people are going to be eating more and adding more protein to their diets. Emerging markets are incredibly important to this company, and as people raise more cattle, more swine, more poultry in confined spaces, this tends to increase the use of antibiotics and vaccines.
Another business they’ve entered fairly recently, but in a big way, is aquaculture, fish farming, which I think is less than 5% of their business right now, but it is one of their fastest-growing segments. When you raise fish in a very confined environment, it is important to have good infection control and products such as that because illness tends to spread very quickly.
Zoetis is classified as a health care company, but it should have probably mid- to high-single-digit revenue growth and 10% to 12% earnings growth for at least the next few years. If you looked at 2015, it had 11% earnings growth. It will probably be more like 17% in 2016, dropping down to 10% going forward. It’s a consistent growth stock, a leader in its industry with not a lot of competition, a high return on capital, a strong balance sheet, all those things that we like in a growth stock.
Full interview available here.
CEO Benjamin Halliburton of Tradition Capital Management says people are concerned about AbbVie Inc (NYSE:ABBV) and biosimilar competition. He says those concerns are unwarranted, and believes the stock is grossly underpriced and can easily trade over $100 in the next year or two.
A company I think that works for a lot of investors right now — extremely out of favor, large-cap name, pays a nice dividend of 4.14% — is AbbVie. They are the producer of HUMIRA. HUMIRA is the primary driver of profits and profit growth over the near term, and represents a huge amount of their business.
People are concerned that biosimilar competition could erode HUMIRA’s market share and profitability. AbbVie, when you talk to management, indicates that they are very confident in their multiple intellectual property protection strategies, lots of patents that will protect them for years, some of which do not expire for multiple years.
The Street is more concerned about this patent expiration of HUMIRA than the actual management team. The management team has been very active in protecting the intellectual property of HUMIRA. So we think that stock is grossly underpriced with a view that the stock can easily trade over $100 over the next year or two, and it’s currently trading in the low $60s.
The other part that is an interesting potential bonus is they do have a strong product pipeline that the management team has detailed that could put kickers on the revenues and earnings growth in the three- to six-year time frame. But I think the big opportunity is how Wall Street is overly concerned that there will be direct HUMIRA competition, and we don’t think that’s the case.
