Portfolio Insights: Alger Weatherbie Specialized Growth Strategy


Josh Bennett (continued): The companies that adopt that mentality and adopt that flexible thinking I think are going to be the companies that succeed.

We've always said that growth investing is primarily about getting the fundamentals right, but that said, valuation does matter and we do apply rigorous valuation discipline to understand every one of our companies, both on the upside and downside and expected value based on weighted outcomes. Why Weatherbie? We've been investing in smaller cap equities for 25 years and much of our approach remains unchanged, our investment philosophy and process, the specific growth stock criteria we use. We consistently and methodically refined and improved our process and our team over time. That gives me confidence that when you look at our team-managed approach, it adds real value and we continue to believe in our ability to identify innovative, smaller cap companies.

And what has permanently been hampered? I have real questions about the impact of a move like this on office real estate, particularly in large cities. So if you think about it, it's hard to imagine that as contracts come up and leases expire, that all these kinds of office REITs and companies along those lines are going to be as well positioned. Either they're going to keep their footprints and have to charge less for it or you may see a lot of companies that are shrinking their city footprint. Those are the first things that come to mind. I think you're likely to see other changes over time, but on the positive side, I think work from home has completely changed the job of a knowledge worker and I think on the flip side of that, I think we're likely to see continued challenges for companies that depend on office real estate. Ted Doyle: Here’s a question that came over e-mail. Could you briefly address why the small cap asset class is an attractive place to be now and if you do believe in small cap growth as an attractive asset class, why would you think that Weatherbie Specialized Growth is a good place to be? Joshua Bennett: All we do at Weatherbie Capital is smaller cap growth. We do believe that smaller cap companies are truly the most innovative companies that you can invest in today and they tend to control their own destiny instead of riding the markets. We think that they're well positioned against their competition because oftentimes that competition is smaller and less resourced mom and pop companies. We fully understand that some people are going to be concerned that small cap valuations are a bit elevated today, but we only own 50 companies and we own 50 of what we believe are the best companies in our smaller cap universe.. We believe that these companies are true quality growth stocks positioned to do well in this environment and we believe that those valuations are justified by their strong outlook.

These companies tend to be less covered and they've proven to be resilient regardless of the macroeconomic backdrop.

Ted Doyle: On behalf of all my colleagues at Alger/Weatherbie, I want to thank you for not only your time today, but your continued belief in our organization.

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