67 WALL STREET, New York - June 25, 2014 - The Wall Street Transcript has just published its 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: Reactionary Investing - High-Quality Companies - Investing in Special Situations - Secular Growth Themes - Large-Cap, Deep-Value - Defensive Growth Approach - Long-Term Investing - Event-Driven Investment Opportunities
Companies include: Berkshire Hathaway Inc. (BRK-A), Johnson & Johnson (JNJ), JPMorgan Chase & Co. (JPM), Microsoft Corporation (MSFT), Lockheed Martin Corporation (LMT), Strayer Education Inc. (STRA) and many others.
In the following excerpt from the Investing Strategies Report, an experienced and professional portfolio manager discusses his investing methodogy and current top picks for investors:
TWST: Let's begin with a brief history of Alpine Capital Research and an overview of your responsibilities.
Mr. Piechowski: Alpine Capital Research, ACR, was founded by Nick Tompras in St. Louis in 1999. Prior to founding ACR, Nick was running a large-cap strategy for the asset management arm of a local bank, and as the tech bubble was peaking he found it difficult to put client capital to work, as normalized earnings on the S&P 500 were approaching 40 times. At the same time he noticed that there were a number of small and midcap companies trading at eight to 12 times earnings that were reasonably undervalued. His large-cap mandate didn't allow him to buy these companies, so he decided to leave the bank and found ACR, where the firm's flagship strategy, Equity Quality Return, EQR, is an all-cap strategy that can hold cash when attractive opportunities are unavailable.
The EQR strategy's track record starts in April of 2000, which was a terrific time to be starting a strategy with a value philosophy, as there was the opportunity for meaningful absolute returns from small and midcap companies, and then relative outperformance as the Internet bubble popped and many names declined dramatically. The EQR strategy composite's returns since inception have been 13% gross of fees, while the S&P 500 total return index has achieved 3.6%. Some of the strategy's outperformance is due to good performance following the tech bubble, but the strategy also performed well in the financial crisis with a decline of 13.9% in 2008, versus 37% for the S&P 500, and outperformance in 2009-2011.
Today the firm has $1.5 billion in assets under management with 11 employees and two part-time consultants on staff. I serve as a Co-Portfolio Manager with Nick and Willem Schilpzand on our EQR strategy. We run the strategy with a 20-stock target, and as I mentioned before it is an all-cap strategy, and we hold cash when we cannot find ideas that we believe will earn returns above their cost of capital.
Within the strategy I have up to five slots to invest in the portfolio, and then I work as an Analyst on five of the names that Nick puts in the portfolio. Willem Schilpzand has an identical role to mine, where he can put up to five names in the EQR strategy and works as Analyst on five of the positions selected by Nick.
TWST: How involved are you in adjusting the portfolio according to specific investment objectives, which I imagine are fluid depending on your client?
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.