Portfolio Insights: Alger Weatherbie Specialized Growth Strategy

TRANSCRIPT

The only way you could use Chegg as a cheating tool would be if a professor is taking the exact problem straight out of a textbook and using those as test questions, which would probably not be a great way of teaching anyway. All that to say, we've done significant research on this kind of issue of Chegg being used as a cheating tool. We believe that that's the minority of cases and in the vast majority of cases, Chegg is an incredibly powerful tool that's helping students who are stuck at home and no longer have access to tutors or to teaching hours or to kind of peer learning assistants. Speaker Question : I had a question about Everbridge. I wanted to see what your thoughts on that one and if you had looked at AudioCode, which is one of their competitors in a similar sector and wanted to know if you had your eye on that stock as well? Josh Bennett : Everbridge is another name similar to Chegg that's in that bucket of companies that are in our portfolio that are helped by the current situation. Everbridge, for those who may not know, is a company that focuses on what's called critical events management. When things go wrong, when there are global pandemics, when they are terrorist strikes, when there are a significant weather events, the most important asset for most companies these days is their people. And Everbridge helps you make sure that you can track down your people and make sure that they're

Speaker Question : You mentioned the three buckets that your companies are falling into. Can you comment on the companies that did not fit any of those buckets in terms of which companies may have left your portfolio after the first quarter or between the first quarter and now? Josh Bennett : Thanks for your question. We can't comment on recent trading activity, but I can tell you at a high level that the way to think about it is when you look at our portfolio, what you tend to see is on the larger end of our portfolio, again, the top 10 positions are over 45% of our assets. We are a true focused strategy. We only own 50 names with a top 10 being nearly half of our assets. When you get down to the bottom 10, bottom 15 names, those stocks are going to fit into one of two categories. They're either going to be names that we recently added to the portfolio, where we're doing more in-depth research and we think that they have potential to become one of the top positions in the portfolio over time. Or you are going to see names that used to be larger positions in the portfolio, we think that there are still good growth prospects, but we're evaluating them carefully. And the great discipline that we have is since we're only going to own 50 names, we have a constant influx of new potential Weatherbie Capital growth stock ideas that are fighting for a slot in the portfolio. And when we come across one, and again through thorough research, you're likely to see a 20-page or 25-page report. You're likely to see an in-depth discussion of an hour and a half, sometimes two hours on one name where the entire team comes prepared. Many of you have heard me talk about this process or one of our team members talk about the process. Let's say we get to the point that it's going to be a new idea. It's going to be out one of those bottom positions. The names that you're talking about that don't fit into the buckets and maybe are going to be kind of more permanently impacted by COVID are likely to be some of the very small positions in our portfolio. And you are likely to see some churn around those small names as we're coming up with some great new ideas to replace them. Does that answer your question?

since IPO, maybe even before IPO, three of us have been to the headquarters multiple times, know the company very well.

AudioCode is a company that we know from the due diligence that we've done on Everbridge. I can't comment on whether that's something that we would necessarily add to the portfolio, but suffice it to say we know Everbridge well, which means we know the competitors well and we feel like this area of critical events management and being able to make sure your people are safe, your most important asset is safe, that's going to drive value in Everbridge for years to come.