Patrick Pascal discusses his firm’s investment philosophy,, which has been largely characterized by participating on the upside with the market and limiting downside with the market. Mr. Pascal takes a macro view of the world’s economies, identifies sectors he likes, and at that point looks exclusively at the leaders in each sector. He says this philosophy brings long-term results to investors because turnover can be very low.
Full interview available here.
Lisa Z. Ramirez discusses Denver Investments as well as the Westcore Small-Cap Value Dividend and Westcore Mid-Cap Value Dividend Funds. Ms. Ramirez’s investment philosophy is based on four tenets: focusing on cash flow, rather than earnings or revenue growth; investing in quality businesses that pay a dividend; buying businesses on sale; and making team-based decisions. According to Ms. Ramirez, this approach makes sense in all market conditions because dividend-paying stocks have historically outperformed the market and done so with less risk. In addition, Ms. Ramirez expects to participate in up markets and protect capital in down markets because she invests in companies with a lower payout ratio that can grow their dividends over time.
Full interview available here.
Kenneth N. Ross discusses Eagle Capital Management, LLC. Mr. Ross provides balanced fund services to institutional and individual clients. He develops an asset-allocation target for each client and then builds a portfolio with equity and fixed income securities. Mr. Ross considers himself a risk manager as well as an investment adviser. He manages risk on a functional basis by creating diversified portfolios and on a tactical basis by establishing sell targets at the security level. When it comes to selecting equity investments, Mr. Ross builds a portfolio with a combination of ETFs, or what he calls first responders; dividend growth stocks; industry leaders; and companies that change the way people function today.
Full interview available here.
Patrick Pascal, President of Chelsea Management, says 3M Co (NYSE:MMM) has been a key stock for his firm’s portfolio because of the company’s continued R&D investments and dividend-raising history, among other characteristics.
It’s been in our portfolio for many, many years, presently trading in the high $170s and low $180s. We owned it for many years and have cost basis between $30 and $60 for most of our clients.
But what we like about 3M is its product diversity, its excellent management and long-term philosophy that used to be fairly standard in American industry but has gone by the wayside. 3M continues to spend an inordinate share of its money on R&D. They have a goal that 15% of their revenues comes from products that were developed within the last five years.
They’re in industrial supplies, adhesives and all of that kind of things, but they’re also in consumer staples like Post-it notes and Scotch Tape. They’re also quite strong in health care. Most dental practices couldn’t open these days without 3M. They continue to add many, many high-tech items.
So 3M is a perfect kind of company that we like, particularly in this kind of market. It still yields a better than 2.4% and has a long history of raising its dividend, and we think that can continue for some time.
Sam Peters discusses ClearBridge Investments. He works on the ClearBridge All Cap Value Fund and the ClearBridge Value Trust Fund. Mr. Peters looks for investments with a price-to-value gap. He often finds these opportunities due to behavioral issues, such as overreactions, and in companies where he thinks the market is getting it wrong. Due to the current environment, Mr. Peters thinks an investor shouldn’t be blindly contrary. He believes it is important to identify the risks your being paid to take and to understand why a company’s business value is higher than its stock price.
Full interview available here.
Andrea Nardon discusses his firm’s approach to quantitative investing. Mr. Nardon says that with systematic investing, he aims to exploit specific risk premiums in the market and wrap those into products that are simple to understand. He discusses the different products his firm offers, which include an emerging market fund and a statistical arbitrage fund. He adds that systematic investing in Europe has become popular because smart beta tries to generate additional return in a very clear, logical and transparent way.
Full interview available here.
Malcolm Polley’s firm is an institutional-only money manager. This value-oriented firm has three products: a midcap product, an all-cap product and a large-cap value product. Mr. Polley believes in good businesses at good prices and says his firm’s decision-making process is at the company level rather than the allocation level. Because of the valuation levels the market has reached, Mr. Polley has been finding that either the businesses themselves are troubled or the industry has been troubled. He is currently finding a number of misunderstood or special situations.
Full interview available here.
Francisco Javier Perez Fernandez discusses March A.M. Mr. Perez is in charge of the firm’s global funds as well as two thematic funds, The Family Business Fund and March Vini Catena. The Family Business Fund invests in family-owned businesses, while March Vini Catena invests in wine and spirits. One of the firm’s global funds is March Global. Mr. Perez manages this fund using a fundamental-driven process. Being value-oriented, he aims to identify undervalued equities with huge returns on invested capital.
Full interview available here.
Mark Roberts talks about his bottom-up money management firm. Mr. Roberts primarily uses value stocks, but also invests in growth at a reasonable price. His philosophy is centered around treating each client as an individual. At the present time, Mr. Roberts is recommending that investors keep things short term in the bond market. He also says that dividend-paying stocks make sense for a retiree. He talks about specific stocks and the positive characteristics behind them.
Full interview available here.
Managing Director Sam Peters of ClearBridge Investments says that while MetLife Inc (NYSE:MET) may not look investable to some right now, the company has strong fundamentals, and management is taking steps to lessen interest rate risk.
Most people tell me life insurers are not investable right now with where interest rates are, and I would tell you, if interest rates go higher for whatever reason, there are going to be a lot of things that are not investable, but the life insurance companies will actually become investable, so it’s a little bit of an inversion.
But the key with MetLife is that the management team is acting. They don’t have blinders on, they’re not waiting to get bailed out by interest rates, and they are spinning out their legacy life business later this year and early next year. That will get rid of the big interest rate tail risk, which is the main reason that people consider this not an investable company.
But MetLife still has some excess capital. They’ve got a very good balance sheet, they’ve taken out quite a lot of expenses, and they continue to do that. They’ve been generating good free cash flow, and despite the very, very low interest rates, they are still earning a return on equity of around 10% with very depressed earnings and very depressed fundamentals. Again, interest rates are not flattering them right now, and the company is trading at about one time tangible book value and about 60% of GAAP book, so historically, very cheap.
