Concentration in Selected Stocks as a Successful Fund Management Principle: A Wall Street Transcript Interview with James Cole, Senior Vice President and Portfolio Manager with the Portland Investment Counsel Inc.

Wall Street Transcript

67 WALL STREET, New York - May 28, 2014 - The Wall Street Transcript has just published its Investing Strategies Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Secular Growth Themes - Small Cap Investing - All-Cap Investing - Bottom-Up Stock Selection - Quality of Business - Growth at a Reasonable Price - Long/Short Strategy - Investment Risk/Return

Companies include: AFLAC Inc. (AFL), DIRECTV Group, Inc. (DTV), Ensco International Inc. (ESV), JPMorgan Chase & Co. (JPM), International Business Machine (IBM), Franklin Resources Inc. (BEN) and many others.

In the following excerpt from the Investing Strategies Report, an experienced portfolio manager discusses his investing methodology and top stock picks for investors:

TWST: Let's begin with an overview of your firm and a snapshot of the three funds you manage.

Mr. Cole: Portland Investment Counsel Inc. was started in 1986 offering a family of retail mutual funds. During the 1990s, we became one of Canada's largest privately held mutual fund companies. We sold the mutual fund management contracts in September 2009 to Manulife and took back a subadvisory agreement, and in June of 2012, we terminated that agreement. We then launched our own funds in October of 2012.

The three funds that we're talking about today are three of the funds that we launched under the Portland banner. Portland is controlled by Michael Lee-Chin, one of Canada's most successful entrepreneurs. The three funds that I manage are the Portland Focused Plus Fund LP, which is a limited partnership and alternative strategies fund, and two traditional mutual funds, the Portland Canadian Balanced Fund - which is in the Canadian Equity Balanced category of mutual funds, meaning balanced funds that are skewed to equities - and the Portland Canadian Focused Fund, which is a Canadian Focused Equity fund.

TWST: Can we take a closer look at the investment objectives and strategies for each of the funds?

Mr. Cole: The investment objectives for the three funds are really all the same, which is over the long term, preservation of capital and a satisfactory return. Each of them has different constraints given the way they are designed and the regulations applicable to those funds. The fund with the greatest flexibility is the Portland Focused Plus Fund LP. Its core techniques are focus and leverage, and it's also unconstrained as to foreign content, whereas the two mutual funds can't focus to the same degree. Canadian mutual fund regulations stipulate that one can't purchase to a greater than 10% weight in any individual issuer, and they don't use leverage. And Canadian funds, such as the two that I manage, typically can't exceed 49% foreign content.

TWST: What differentiates the Focused fund from its peers?

Mr. Cole: I'll say with regard to focus, one does see a number of funds that describe themselves as focused. I don't consider them to be that myself. We're running a genuine focused fund here. We had six holdings at the end of 2013, and I am quite prepared to take any individual business up to as high as 50% of the fund's net assets. Although in the cases of banks and insurance companies, which have leverage which is inherent to their business models, and therefore they are somewhat less predictable than other businesses might be, I've put a self-imposed limit that I won't buy an individual bank or insurer to more than 25% of the fund's net assets.

TWST: Can you give us a view to the analytic techniques used in the Focused Plus Fund? What does it take to make it into those six holdings?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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