Portfolio Insights: Alger Weatherbie Specialized Growth Strategy
Josh Bennett (continued): Matt has a reputation in the Boston area as one of the premier growth investors having run Putnam’s Voyager Fund through the 1980s, growing that from less than a $500 million fund to well over $5 billion, and then he left in 1995 to found this little company called MA Weatherbie and Company, which became Weatherbie Capital. So, Weatherbie Capital, we are based in Boston. We’re still kind of a lean mean machine focused on small cap growth, that’s all we do, and Matt is still involved but little by little, he’s been handing the reigns to my colleague, George Dai and me, and I look forward to telling you a bit more about that, but Matt has an incredible reputation as a growth stock investor and when he left Putnam, it was really to get back to his roots, which were small or smid growth investing. So, we now implement what we call the Weatherbie Way, which is an institutional-grade small cap growth process and I look forward to talking more about that, so that gives you a quick background. Jacobus: Awesome. That’s great. Tell us a little bit about the team structure, what kind of analysts that you have surrounding you and feeding you guys ideas when you do your research on the Weatherbie stocks that you put in a portfolio? Bennett: Sure, so I mentioned we’re lean and mean and I really mean it. The team-up in Boston, we have fewer than 10 people in the Boston office, and again, we’re a wholly owned subsidiary of Alger. So, since March of 2017 when Alger acquired us, we’ve been that wholly owned subsidiary, but we operate very independently up in Boston. We don’t share research back and forth with Alger. We do things the way that we’ve always done it, and it happened to be a lot of parallels in how we do that and I can talk about that if you like. The way the team is structured is that Matt is the head of the Boston office and after Matt, I have myself and George Dai, kind of the two senior leaders of the office. George is co-CIO of Weatherbie Capital with Matt Weatherbie, and I’m the senior managing director, director of research. So, George kind of handles the CIO responsibilities, the kind of outlook and I handle: the hiring and training of our analyst team.
Our analyst team is incredibly experienced. We have Dan Brazeau, Ed Minn and Scott Lipschitz who all work as analysts, but what’s important to understand and, we get this question quite often, they say, well, how can a team that size with Matt plus Josh and George and three analysts cover the market? Well, we’re very focused in terms of what we look for in companies, so we know a Weatherbie growth stock when we see one, but the other thing is you ask how the team is structured and it’s important to realize that George and I are still analysts, so we’re analysts and portfolio managers. We’re the lead portfolio managers on this strategy, but you have the two of us, plus three other highly experienced analysts, who have each been kind of assigned, by me as part of my role as director of research, assigned multiple sectors of the market to look for these Weatherbie growth stocks. Jacobus: We talk about 50 stocks in the portfolio, the Weatherbie 50. Number one, why 50 stocks? Then maybe if you could talk a little bit about the difference between almost a barbell approach of opportunity and a foundation stock that the Weatherbie team talks about. Could you give a little detail on why 50 and the differences between the two types of stocks that we put together in the Weatherbie 50? Bennett: Sure. At Weatherbie Capital, we believe in focus. What we mean by focus is it’s great to say that you do fundamental research on stocks, everybody says that we’re bottom-up fundamental stock investors like everyone else, but if you do the amount of work that we do on the companies that we end up owning as a Weatherbie 50, if you’re not focused, if you end up with 75, 100, 125, 150 stocks, we feel like what you’re doing is you’re diluting your best asset, and the best asset, in our view, is the team and its ability to understand these companies better than anybody out there. So, we believe in focus.
Conference Call 2/10
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