Portfolio Insights: Alger Weatherbie Specialized Growth Strategy

TRANSCRIPT

Josh Bennett : What we've noticed is that we can look at this on a sector basis, but even within sectors, it tends to be that you have companies that are performing great and others that are not performing as well. Take for example, the health care sector. We had some very strong performance from the health care sector out of two names in particular, Acadia Pharmaceuticals and Insulet. And I'll just talk quickly about those two companies and why they performed well. And then we'll talk about Glaukos, which did not perform as well in that group. Acadia is a pharmaceutical company focusing on the development of small molecule drugs to address medical needs and the in kind of central nervous system disorders. They are not going to be impacted by a lot of what's happening due to COVID-19. In a similar way, Insulet. They develop and manufacture insulin delivery systems for people with type one and type two diabetes. If you think about diabetes, that problem obviously does not go away because of COVID and home stay programs. So both of these companies were much less impacted by COVID-19 than the broader sector. On the flip side, there's a company in our portfolio called Glaukos, which is a medical device company specializing in optical stents that need to be implanted in your eyes to help glaucoma. Given that this is an elective procedure, patients are essentially being forced to delay these procedures during the COVID-19 shutdown. You can see that we had several names in the sector that performed quite well and really drove recent performance, but you're always going to have some names that if there's going to be impacted by COVID- 19, they're going to be detractors.

add a name that's above $2.5 billion in market. There are several companies that we know well and that we followed for years. We've met with management multiple times. We've done significant research on the companies, but given that they blew through our $2.5 billion cap limit for an entry position, we had to let them go and continue to watch them. We had the opportunity to get dialed in and focus on finding these next Weatherbie stocks, some of which will come from names that are below that $2.5 billion giving us the opportunity to establish the initial position. The team is focused, the team's working incredibly hard. We are remote, but we feel almost like we're not remote given the number of calls we're on face to face on video and we're finding some great and exciting ideas for the portfolio. Speaker Question : I have a question about Siteone Landscape Supply. I have a lot of contractors that are landscaping contractors and Siteone has been buying up every single one of the supply houses out here and they've all called me to ask me about the company. But they've said that the level of service has gone down now as a result of the consolidation, that the mom and pop feel to some of these supply houses that they had, some of the credit that they were being extended. I know that you guys have a position in Siteone. Have you guys been talking to management about how they're integrating and how they're going to address that as a concern? If they even are aware of it yet. Josh Bennett : Absolutely. Thanks for the question. Yes, Siteone is a company that we've known and owned for multiple years now. If you think about what they do as you mentioned, they're the leading consolidator in the industry. They're going around and buying up the best kind of regional mom and pops or sometimes it's broader than a mom and pop more but almost mini corporation in each region. And you're right, they do kind of institute more corporate policies. The feedback that we get in the industry calls that we are doing on an ongoing basis has actually been quite positive. Alan Kirby : Thanks Josh and operator at this time, let's open the call up to a Q&A from any of the folks that we have on the line today. Thank you.

Alan Kirby : Well, thanks for that insight on all three of those companies. Before we move on to Q&A from everyone, any final thoughts?

Josh Bennett : There are so many fast growing exciting companies that we're finding and we actually think that the current environment is creating some exciting opportunities to build the portfolio, to add names, small positions that we see likely to be built up over time. I'm sure everyone on the call will remember that we won't