Value in Small-Cap Asset-Heavy Companies: A Wall Street Transcript Interview with Eric K. Cinnamond, Vice President and Portfolio Manager for the ASTON/River Road's Independent Value Portfolio at River Road Asset Management

Wall Street Transcript

67 WALL STREET, New York - January 6, 2014 - The Wall Street Transcript has just published its current Value Investing and Other Strategies 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: Small Cap Investing - Contrarian Approach to Investing - Quality of Business - Value Oriented Strategy - High-Quality Companies - Long-Term Intrinsic Value - Asset-Heavy Companies - Multicap Contrarian Investing

Companies include: Asset Rich Small Caps with Reasonable Valuations

In the following excerpt from the Value Investing and Other Strategies Report, an experienced value oriented portfolio manager discusses the his top picks and 2014 market valuation outlook for investors:

TWST: For our first question, can you give us an overview of the fund, its holdings and its objectives?

Mr. Cinnamond: Sure. The objective is very different than most small-cap funds in that we are attempting to achieve attractive absolute returns over an entire profit cycle which often coincides with a market cycle. So to do that, it's important over a profit cycle, which often lasts five years to seven years, to avoid losses. And how we do that is very simple - we refuse to overpay when prices reach levels that are not adequately compensating us for risk assumed, so it's very important that when we have these periods of speculation or excessive asset inflation, that we remain committed to our discipline of not overpaying. So when prices just don't make sense, as currently is the case, we will not invest other people's money in overvalued small-cap stocks simply to keep up with the relative performance.

To do this, there will be periods when we hold large amounts of cash. Our cash level is simply a reflection of the value we're finding within the 300 names or so of high-quality small-cap businesses that we follow. So cash historically has been almost fully invested to over 50%. Currently we're at record levels of cash, which reached over 60% as of our last disclosure. The Independent Value strategy is now 15 years in the making, and cash now is at an all-time high. So that should tell you what we think about small-cap valuations.

TWST: Is it possible to give some specific examples of holdings that you do have in your portfolio that were chosen as a result of the guiding principles of your investment philosophy?

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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