67 WALL STREET, New York - December 12, 2013 - The Wall Street Transcript has just published its Top Ten Portfolio Manager Interviews of 2013 Report. This special feature contains expert industry commentary through in-depth interviews with highly experienced Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Top Ten Portfolio Manager Interviews of 2013
Companies include: Top Global Stock Picks
In the following excerpt from the Top Ten Portfolio Manager Interviews of 2013 Report, an experienced portfolio manager discusses his methodology and top stock picks for investors:
TWST: Describe further your investment philosophy. You have a term you use, "gravity investing."
Mr. Miles: Gravity investing is essentially a thematic overlay that we employ within our portfolio research that seeks to observe and exploit trends in the global economic and social landscapes which we think are leading to seemingly unavoidable and highly predictable outcomes. We liken the predictability of some of these story arcs to essentially that of dropping a brick out of a two-story window. Unless some outside force really comes out and interrupts or influences in a very dramatic way the trajectory of that brick, that brick is going to hit the ground.
And there are a number of story arcs in the global economy that we think are suggesting unavoidable or highly predictable outcomes that will drive capital flows and investment for years to come. Some of these key themes have become more evident today, as the world has evolved. But when we began circulating these ideas in 2004, they were pretty innovative.
One such example is the urban migration trend, where we see people from the rural developing and rural developed world moving into cities where they can engage in commerce and access a broader range of goods and services. We call that "moving to the aqueduct," and we like to refer to the story of ancient Rome to demonstrate its importance.
By 100 A.D., when Rome was at its peak, the city was serving over a million people and had over 11 working aqueducts that were delivering water and retrieving waste water. With the fall of Rome and the destruction of the aqueducts, in a very short period of time - less than 10 years - the population of Rome dwindled from a million to under 300,000, and much of the technology was lost for centuries until resurfacing during the Renaissance. So this concept of the aqueduct is a central theme that we think will drive capital flows as people continue migrating to urban centers.
This theme dovetails nicely with another gravitational trend we call "resource lifecycle management." The world is recognizing that the era of cheap and easily accessible energy, water and food is being challenged by resource scarcity, emerging demand trends in parts of the world, including Latin America, Asia and the Pacific Rim, and environmental regulation. And those factors in concert are creating bottlenecks that can only be solved through efficiency technologies, products and services that pull costs out of these high-cost systems.
So we look at the key areas - providing health care in the Western world, where you have aging demographics and the costs are rising; securing new energy supplies, delivering food in the emerging world, managing water quality and distribution, managing waste streams effectively. If you can pull costs out of these high-cost systems, if you can create the technologies, services and products that help resolve bottlenecks within the water-energy-food nexus, you are likely to see a lot of growth in an otherwise topline challenged world.
In all, we have identified 12 key themes. Others include climate change leading to greater irregularity of historical weather patterns, increased drought or flooding, reduced snowmelt impacting recharge rates for underground aquifers; what we call the G8 to the G20 world, creating a more balanced global economy where by 2030 60% of global GDP will come from the developing world; water scarcity impacting food prices and availability; wealth disparities creating growing divides between the haves and have-nots.
These story arcs create highly predictable long-term outcomes. We try to invest in the things that will alleviate or solve these challenges or benefit from a competitive advantage as a result of the challenges, and avoid areas that may be on the path to obsolescence as a result of their lack of foresight in preparing from these predictable outcomes. So gravity investing is a thematic overlay that we integrate with our traditional top-down macroeconomic and bottom-up security analysis. We view it as an important and differentiated leg of the stool to inform our investment decisions and add value for the client.
TWST: For your Global Tactical strategy portfolio, how many holdings do you typically target? What kind of turnover does it typically experience?
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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