A Contrarian Approach to Investing: An Exclusive Interview with David A. Rolfe, CFA, Chief Investment Officer at Wedgewood Partners

Wall Street Transcript

67 WALL STREET, New York - October 15, 2013 - The Wall Street Transcript has just published its current Investing Strategies Report. This special feature contains in-depth interviews with top ranked Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Disciplined Growth Approach - Global Economy - Top-Down and Bottom-Up Investing - Bottom-Up Stock Selection - Value Oriented Strategy - Value Investing - Deep Value - Exposure to Emerging Markets

Companies include: Apple Inc. (AAPL) and many others.

In the following excerpt from the Investing Strategies Report, an expert money manager discusses his investing methodology and top stock picks:

TWST: Tell us about Wedgewood Partners and the inception of your current strategy.

Mr. Rolfe: Wedgewood Partners was founded in 1988 by our partner Tony Guerrerio - 1988 is also is the year we started our current investment strategy. In 1988, I was working as a portfolio manager at the old Boatmen's Trust Co. in Saint Louis, Missouri. I'm the architect of our strategy, and I had the opportunity to begin this strategy on full discretionary accounts at my former employer.

Starting back in 1984 while still in college, I had begun studying and researching the successful investors of the day and became quite enamored with focus investing either on both the growth side and value side. By the time 1988 rolled around, I had an opportunity to put those theories and philosophies to work. So essentially the foundational underpinnings of this strategy was the synthesis of the best tenets of growth and value investing, plus the proper temperament and behavior of a successful business owner, all through the advantaged structure of focus investing.

Then in 1992, the founding CIO that started Wedgewood with our partner Tony Guerrerio retired. So in May of 1992 I was hired as Chief Investment Officer. The strategy has been in place for 25 years, and 21 of those years have been at Wedgewood. Along the way, Dana Webb and Michael Quigley joined Tony and I to become part of our investment team in 2002 and 2005, respectively.

TWST: Tell us a little more about your investment philosophy and strategy, and how that translates into making investments.

Mr. Rolfe: In this big wide world of active management, there are now hundreds of active management strategies. In our view, far too many of these firms emphasize the "active" part of active versus passive investing, active trading and/or countless securities in their portfolio. We believe that the key differentiating factor of being an active manager versus your peer group or the benchmark is being different - and at best, significantly different.

In our focused strategy we typically only own about 20 stocks, so right off the bat, we are doing something that quite frankly is a radical departure versus our peer group. Other focus managers have 30, 35 or 40 stocks, but there are not many that just do 20 stocks. The synthesis, if you will, of our thinking in terms of focus is that we recognize that while the stock market is very efficient - and we certainly don't have any informational or IQ advantage over our peer group - we do think we have a philosophical advantage given the fact that all we have to do is build a portfolio of 20 terrific, competitively advantaged businesses that under the classic tenets of value investing are valued cheaply enough to own today. That's it. If you try to do that with 50 or 75 or 100 stocks, that can be a pretty daunting, unrepeatable task.

TWST: You explained that you are looking to find terrific companies at good prices, basically. For you, what are the most important factors that make something a terrific company? What are you focusing on?

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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