Charles Bobrinskoy talks about his firm’s all-cap value strategy. This strategy targets investors with a value orientation and a long-term approach. Mr. Bobrinskoy says the fund is made up of less than 30 stocks in any market cap. He says the practice is focused on finding great companies with great long-term prospects and that have some kind of short-term problem.
Full interview available here.
Portfolio Manager Randell A. Cain Jr. of Herndon Capital Management says United Rentals, Inc. (NYSE:URI) has had its stock maligned because of the company’s tie to the energy industry, but the potential for new infrastructure spending has brought the stock back up approximately 40%.
We own a company called United Rentals, which basically leases out equipment in a wide variety of more capital-intensive, heavier industrial type of industry groups. It’s not unusual to see industrial construction going on. If you look and see some of the cranes, it probably wouldn’t be unusual to see United Rentals let along the side.
For a while, the stock has been a bit malign because of this tie into the energy industries as oil prices are coming down, even though their energy aspect of the portfolio business only fell about 10%. When things go negative, the market tends to focus on the weakest denominator rather than looking at the company in whole in aggregate, and we do that.
We have a analyst on our team, Keith Buchanan, who has done a phenomenal job for us in making us smart about companies like this, and it came on our radar screen with the analysis and made a decision that this was a company that was being unjustifiably punished, and that it would, in saner times, did a very nice return, and that’s exactly what has happened.
This stock has gone up about 30%, 40% in a brief period of time as the market now has seen the potential for the infrastructure spending, which is right up the United Rentals’ alley. And so again, what one time is considered to be an anchor holding the valuation back — we are concerned about economy activity and energy in particular — now has started to turn and go in the other direction. And so that’s one company that we have brought to the portfolio not too terribly long ago.
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Matt Arens discusses First Light Asset Management, LLC. The firm focuses on investing within the health care sector. Mr. Arens aims to find innovative companies that can drive positive change within health care. Ultimately, he likes companies that improve patient care and reduce the overall cost of care. Mr. Arens uses a strict process to determine the difference between a company’s intrinsic value and its market capitalization. This helps him to identify companies with real growth at a reasonable price, and it’s a process, according to Mr. Arens, that is helpful in both good and bad markets.
Full interview available here.
Phil Bak discusses ACSI Funds. With the idea that customer satisfaction has an impact on stock prices, Mr. Bak developed an ETF methodology. He wanted the thesis to be simple, and the approach to be rules-based, repeatable and academically defensible. Mr. Bak created an investable version of the American Customer Satisfaction Index by adding risk tolerances. The ETF then tracks to the investable index. The aim of the ETF is to be diversified and generally match the exposures of the broad market without a bias toward growth or value. The portfolio currently holds 160 names.
Full interview available here.
Andrew Chanin discusses PureFunds, a thematic ETF company. Mr. Chanin’s firm offers ETFs that focus on specific industries, such as video game technology, mobile payments, drones and health tech. He says the ETFs are about providing differentiation and something different for investors who are in broad-based sector funds. He says that while many people are invested in broad-based sectors, they may also want different exposures that are also in that sector which aren’t being covered by those broad-based funds and that are providing disruptive technologies.
Full interview available here.
James Anderson discusses Tierra Funds LLC and the Tierra XP Latin America Real Estate ETF. The ETF is a passive product that gives investors a low-cost way to access Latin America REITs and real estate operating companies. The fund captures attractive dividend yields and growth potential. According to Mr. Anderson, by investing in listed equities, rather than making direct investments, an investor is provided with liquidity, current income and lower fees. The ETF currently holds 61 companies. Holdings are selected using a rules-based methodology, and the fund rebalances each quarter on the basis of market cap, trading liquidity and dividend yield.
Full interview available here.
Portfolio Manager Julian Pick of Polen Capital says O’Reilly Automotive Inc (NASDAQ:ORLY) is a compelling business that has created value for both shareholders and customers.
The largest fleet of cars in the United States — sorry, in the world is here in the United States. People really depend on their cars here, I think you’ll agree, whether it’s a school run or getting to and from work or perhaps going to visit a relative, they are indispensable. So they need health care, they need over-the-counter health care just like people do, and O’Reilly is a leading supplier of parts, not just to individual owners, but to the trade, to professional car repairs as well.
It’s an intriguing business in a way, because when you need your car repaired, you really need it repaired today. You don’t really have that luxury of waiting around for a couple of weeks for the right parts to come in. The other side — intriguing aspect of this is that most people are driving older cars…because they tend to be more valuable; they tend to be more reliable than they were a few decades ago. In other words, it’s really worth investing or repairing your vehicle. You can expect more miles that in the same vehicle than you can before. Yet the industry that controls distribution of car parts is still rather fragmented.
O’Reilly is one of very few that achieved economies of scale in distributing car parts, meaning not just availability of sheer numbers of parts, but also speed of delivery and ability to work closely with you as an owner or indeed with the shop. So you’re right, it’s a different part of the world. It’s a very different business model, but it also strikes us as a fairly compelling business that creates a lot of value for the shareholders as well as for its customers.
Full interview available here.
Robert S. Bacarella discusses Monetta Financial Services Inc. as well as its Monetta Fund and Young Investor Fund. The Monetta Fund, which started as a small-cap growth fund, now emphasizes large-cap growth companies as a means of making more stable and predictable investments. Mr. Bacarella uses a bottom-up approach to find ideas for the fund, and it currently holds 60 stocks, with the biggest weightings in technology, energy and financials. Then, the Young Investor Fund, which is more concentrated than the Monetta Fund, uses a combination of active and passive investing. The active portion of the fund mimics the Monetta Fund, while the passive portion of the fund tracks the market. Mr. Bacarella finds this combination approach generates both stability and performance.
Full interview available here.
Juha Varis discusses Danske Capital. The firm manages various funds and investment styles in Finnish equities. According to Mr. Varis, there are multiple trends at play in Finland. After years of no growth, Finland’s GDP is picking up due to increases in the construction and real estate markets. In addition, Finland is more dependent on global growth than much of Europe because of its tilt to cyclical sectors. Finnish equities are also paying higher dividends than the European markets. Lastly, as investors focus more on responsible investing, the Helsinki Stock Exchange ranks the best in the world in terms of ESG reporting.
Full interview available here.
Eric R. Ervin discusses Reality Shares, Inc. The firm’s funds are managed with a focus on dividend growth. Specifically, the DIVY fund invests in dividend futures and swaps to invest in dividend growth without stock price exposure. Then, there are three ETFs that are based on a forward-looking dividend strategy that aims to capture dividend growth through companies that are most likely to grow their dividends. To select holdings for these ETFs, Mr. Ervin uses seven factors to rank companies by dividend health. This quantitative approach allows Mr. Ervin to base decisions on future dividend growth rather than only on historical data.
Full interview available here.
