A Wall Street Transcript Interview with Loren Coffelt, Co-Portfolio Manager of the Empiric Core Equity Fund: A Quantitative Investment Approach Seeking Long-Term Capital Appreciation

Wall Street Transcript

67 WALL STREET, New York - February 13, 2014 - The Wall Street Transcript has just published its current Investing 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: Investing Strategies - Value Investment - Dividend Reinvestment Strategy - Portfolio Managers

Companies include: Cirrus Logic Inc. (CRUS), Apple Inc. (AAPL), Sanderson Farms Inc. (SAFM), Questcor Pharmaceuticals, Inc. (QCOR) and many others.

In the following excerpt from the Investing Strategies Report, an experienced portfolio manager discusses his methodology and top stock recommendations for investors:

TWST: Could you please give an overview of the fund, with a view to its objectives and the core philosophy that guides you?

Mr. Coffelt: The Empiric Core Equity Fund is an equities-only fund that takes a quantitative approach. The fund seeks long-term capital appreciation and we backtest a universe of factors to select our stocks, and we select stocks from the Russell 2500, so we have about 400 different factors at our disposal that we monitor on a continual basis to assess how they are currently performing. So generally what we do is from this basket we select a few of these quantitative metrics and we combine them, and that is how we select our stocks.

TWST: Where do you begin? Where do you find your best ideas initially, and can you explain your screening tools or valuation techniques?

Mr. Coffelt: We've come at it from multiple angles. One of the most important screening tools that we've used is we have a system which backtests the factors to see if we had used that over a period of time, how we would have done. So that has been really useful in assessing whether a quantitative metric is good or not.

You have some quantitative metrics that are really good, but the only way you can use them is if you buy 400 stocks on that quantitative metric, and that makes that quantitative metric difficult to use on a continuous basis or to combine with other factors.

TWST: Can you give an example of a specific holding that exemplifies the fund's investment philosophy or valuation techniques?

Mr. Coffelt: Before I get into the holdings, one thing that we found is we were using what we called a quality screen. The quality aspect is a combination of factors that assesses the increasing profitability of a company, so what we do is we take these profitability quantitative metrics and we add a valuation metric into it, and that is how we develop the screen. So what I was saying before about backtesting those factors - we have to make sure that the factors are useable and that they're currently generating alpha.

Some of the stocks that we have purchased...

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.

Rates

View Comments (0)