Forging Teamwork Is Key to the Weatherbie Way
During teammeetings, rigorous debates ensure that the team under stands and feels comfortable with all the upside and more importantly, the potential downside. “We all get along extremely well outside of the confer ence room and we respect each other professionally. But inside the confer ence room, it is a level playing field,” George explains. “We all want to leave a meeting with confidence that all key aspects of a company have been discussed and challenged.” Matt draws upon his extensive experi ence to search for any unforeseen weaknesses or strengths in an invest ment idea. As noted by Josh, “Matt will quite often say, ‘This company reminds me of another company.’ He will draw upon the comparison and his unique perspective to pick apart an idea.” Josh, for his part, brings intense questioning to meetings. His knack for fleshing out knowledge through questions started at an early age. “As a child, I would frequently ask my parents big questions and my parents would have to conduct research to find answers. Today, during meetings, one question can easily lead to 10 others. Sometimes, my questions may seem too deep or detail oriented, but I really want to get to the core of every invest ment idea.” George, meanwhile, tends to seek more data to develop investment proposals, which isn’t surprising. He
has a doctorate in organic chemistry and as a former pharmaceutical researcher, he has four U.S. patents under his name, so he is comfortable with the scientific process. During the Chegg discussion, the entire team, including Matt and Josh, peppers Dan and George with questions and initially challenges each other on whether Chegg meets the firm’s strict investment criteria. George and Dan, however, argue that over the last few years Chegg has been growing its online education, homework assistance and tutoring services. It has made enough progress with those initiatives and has demonstrated early signs of market leadership in these niches. Additionally, Chegg has outsourced its textbook rental operations, which has freed up capital for the firm’s more profitable online services. Dan and George also maintain that Chegg already has considerable brand recog nition among students and educators, and is therefore well positioned to expand its offering with online services. After extensive discussions and debates, the team is convinced by the strong, fact-based arguments from Dan and George and adds Chegg to the Weatherbie 50. Over the next few quarters, Dan and George’s thesis continues to play out successfully as predicted. Fast forward a few years and the investment team remains excited
about Chegg. The company is provid ing critical educational services that help the educational community in the midst of the Covid-19 pandemic, which has caused schools to cancel classes and close facilities. As a result, students who are taking online classes may turn to Chegg for various online services. After becoming familiar with Chegg Study, Chegg Tutoring and other offerings, new student subscribers may continue to use the services even after the pandemic subsides. Time-Tested Collaboration Matt says the collaboration illustrates the strength of an investment process that benefits from teamwork without being burdened by cumbersome and bureaucratic hurdles. It sounds simple, but for the process to work, each team member must provide unique perspec tives on investment ideas while also embracing “the Weatherbie Way.” The process has been further refined over the years. “We have been managing this portfolio together for more than a decade,” Matt explains. “And the whole team has been inculcated in the Weatherbie Way.”
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The views expressed are the views of Fred Alger Management, LLC (“FAM”) and its affiliates as of May 2020. These views are subject to change at any time and may not repre- sent the views of all portfolio management teams. These views should not be interpreted as a guarantee of the future performance of the markets, any security or any funds managed by FAM. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities. Holdings and sector allocations are subject to change. RISK DISCLOSURE: Investing in the stock market involves risks, including the potential loss of principal. Growth stocks may be more volatile than other stocks as their prices tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political, and economic developments. A significant portion of assets will be invested in technology and healthcare companies, which may be significantly affected by competition, innovation, regulation, and product obsolescence, and may be more volatile than the securities of other companies. Investing in companies of small and medium capitalizations involve the risk that such issuers may have limited product lines or financial resources, lack management depth, or have limited liquidity. Assets may be focused in a small number of holdings, making them susceptible to risks associated with a single economic, political or regulatory event than a more diversified portfolio. Foreign securities and Emerging Markets involve special risks including currency fluctuations, inefficient trading, political and economic instability, and increased volatility. As of March 31, 2020, Chegg Inc. represented 5.94% of Alger Weatherbie Specialized Growth Fund assets and 5.92% of Alger Weatherbie Specialized Growth strategy assets. Holdings are subject to change. Before investing, carefully consider a Fund’s investment objective, risks, charges and expenses. For a prospectus or a summary prospectus containing this and other information about a Fund, call (800) 992-3863, visit www.alger.com, or consult your financial advisor. Read it carefully before investing. Distributor: Fred Alger & Company, Incorporated. Member NYSE Euronext, SIPC. NOT FDIC INSURED. NOT BANK GUARANTEED. MAY LOSE VALUE.
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