A Focus on Individual Long-Term Investments: Wall Street Transcript Interview with Leigh Niebuhr, Senior Portfolio Manager at Compass Capital Management

Wall Street Transcript

67 WALL STREET, New York - January 17, 2013 - The Wall Street Transcript has just published its All-Cap Growth Investing and Other Strategies Report. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: All-Cap Growth Investing - Closed-end Mutual Funds - Investing in Gold - Bottom-up Investing

Companies include: Apple Inc. (AAPL), Hewlett-Packard Company (HPQ), Accenture Ltd. (ACN), CVS Caremark Corporation (CVS), Sherwin-Williams Co. (SHW) and many others.

In the following excerpt from the All-Cap Growth Investing and Other Strategies Report, an experienced asset manager discusses his firm's investment philosophy and top picks for 2013:

TWST: What are some important trends you are seeing right now and how are they affecting your investment choices?

Mr. Niebuhr: One of the most important trends we are seeing is there seems to be a migration back to owning individual stocks and individual bonds, and away from product-driven banks and wire houses. Investors we have been talking to want to return to having some transparency and clarity, and knowing what they own. We've had several conversations with individuals coming to us with portfolios that have over 100 individual securities, 10 to 12 different mutual funds, and if that wasn't enough for diversification, they also own the S&P 500 Index. We have always viewed it as an overdiversification in many portfolios, and clients are starting to get a bit tired, frustrated and worn out, and want to get back to knowing what they own and why they own it.

TWST: Did you see investors leaving the market because of the volatility over the last several years?

Mr. Niebuhr: No, we never really saw them leave. I think again that goes back by design to having fewer, more meaningful relationships where we an provide perspective and guidance. At the end of the day, it's the clients' money and they can do what they want with it, but I think that's a large part of why they hire Compass. They are looking to us to provide perspective and some context to the market. We are such long-term investors, and our annual turnover rates historically have been 12% to 15%. We counsel our clients on the virtues of being patient, long-term investors. We view the volatility as an opportunity to identify high-quality companies that may be unfairly underpriced. Perhaps the lower the expectations for the future, the more optimistically you should invest.

TWST: Are there certain sectors you like right now?

Mr. Niebuhr: Our core stock portfolio construction objective is to identify 25 high-quality franchises offering long-term returns with less volatility than the overall market, and we are agnostic to sectors. There are some sectors we avoid because we either do not consider them a true growth sector or they might be highly regulated; for example, utilities. But where we do see some interesting opportunities have been in health care, which is probably not surprising since that's been in the eye of the storm. There are some technology names that look to be interesting as well. But again, we are not top-down or looking to fill certain sectors. Our view is, "Why would you purposely own a sector or even the whole market knowing that some of those are not very good names?"

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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