Considering Ethics, Value and Virtue in Managing Portfolios: An Expert Money Manager Discusses Investing in Socially Responsible Companies that Reflect Personal Values

Wall Street Transcript

67 WALL STREET, New York - April 5, 2013 - The Wall Street Transcript has just published its Investing in Gold and Value for Downside Protection 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 Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Value Investing - Long-Term Investing - High Quality Companies - Global Investing - Investment Strategies - Large Cap Investing - Longer-Term Investing - High Quality Companies - Investing in Gold - Long-Term Value Conservation - Precious Metals

Companies include: Hawaiian Electric Industries I (HE), Berkshire Hathaway Inc. (BRK-A), Total SA (TOT), U.S. Global Investors, Inc. (GROW) and many more.

In the following excerpt from the Investing in Gold and Value for Downside Protection Report, an expert portfolio manager discusses his investment philosophy and portfolio-construction strategy:

TWST: You mentioned Hawaiian Electric. Would you give us some other examples of companies you like?

Mr. Sutherland: We own a lot of holding companies, and we own Haw Par (H02.SI), which is a midsized company in Singapore largely owned by the Wee family. We own Groupe Bruxelles (GBLB.BR) in Belgium, a company that's largely insider-owned. It's a family holding company. One of the concepts where we've been finding value, and where I think we recently got some success, is a theory that I think makes sense. I call it reputational risk.

Think about Warren Buffett, he will do everything to protect his reputation in business. There's a book by Stephen Covey that's called The Speed of Trust, and people that are trusted tend to be a lot more effective as business owners in their relationships. Largely family-owned, well-managed holding companies, like Berkshire Hathaway (BRK-A) in the U.S., GBL in Europe, Haw Par in Singapore, Hutchison Whampoa (0013.HK), or Cheung Kong (0001.HK) in Hong Kong, have the ability to think and act to benefit the long term. Those families tell their teams, I'm being allegorical here, "Don't embarrass the family; don't do stupid stuff."

These companies invest long term, so they are not going to be excited about a manager doing something wrong that makes a profit on a short-term basis. I believe their message is very Ubuntu-esk. Their message is, "We are part of the world community, we are part of our local community, I never ever want to sit down and see my face on the front page of a newspaper because one of my managers did anything that even looked unethical or shaky."

You look at these very successful families, and they have that value of, "Let's do the right thing because it's the right thing." Naturally, they are good business people, but they also, from what I can see, have high ethics. They're aggressive, and they...

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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