Portfolio Insights: Alger Weatherbie Specialized Growth Strategy

TRANSCRIPT

Bennett: We haven’t invented the system of the foundation opportunity growth stocks and finding this growth on unusual places. Sometimes we talk about jewels in mundane industries, or we use the phrase fishing in a different pond, just fishing in a different pond than a lot of people. I like to say we have a broader aperture, so whatever kind of analogy you want to use. If this rotation from growth to value does happen, and it’s difficult to predict whether it will, but clearly, we saw some of that just recently. If that happens, or some might say when that happens, what’s great about the Weatherbie way of investing is that we have this category of stocks that may be outside the purview of our typical competitor. We believe our typical competitor is going to be hamstrung. Why? Because all they do is health care, and all they do is technology. So, if they try to mimic what we do, they may be getting outside of their comfort zone with very little experience, with analysts who may not know those sectors the way that we do, and we believe we have an advantage in that all along the way, we’ve been finding these kind of off the beaten path growth stock stories that some might say, are a bit more value-oriented. A bit more predictable like FirstService Corporation, or as I mentioned, Casella Waste which is a top 10 position today in the waste management industry and benefits and hangs in there better when you see the rotation. So, rather than trying to predict if or when that rotation from growth to value happens, what I’m saying is that the fact that we have this category of foundation growth stocks and opportunity growth stocks, and the fact that all along the way, a key part of our strategy and differentiator has been that we tend to find these names that are off the beaten path, means that we think we’re incredibly well-positioned to identify and continue to identify more and more of these ideas that would then shift away from the traditional sectors that have performed so well in 2020. You’re right, it has contributed to our performance recently with some of these names hanging in there even better than expected.

attribution of where those returns came from? But also some of the challenges and how you persevered through that in 2020?

Bennett: Sure, it’s funny. Boy, I think I’m probably in that same category, even though performance has been strong, I think a lot of us hoped to put 2020 behind us and have just a bit more normality in 2021. So, I’ve heard of folks already shutting down for the year. We’re not. We’re still working like crazy and looking for new ideas. In fact, we’ll be discussing new ideas this week again. Yes, Weatherbie Capital never sleeps. 2020 has been an incredible year, incredibly challenging, and it really has been an opportunity for us to demonstrate the differentiators that we think Weatherbie Capital has that are sustainable into the future. Beginning last year in January, I remember coming back from the New Year’s holiday and I was having conversations with George Dai who is Chinese, by the way, he’s born in China. It’s great to have George as part of the team, so he and I were having conversations in the January timeframe about coronavirus and these were early days. He was in contact already with family and friends, he reads the Chinese newspaper still, and I said, George, what are the chances that this one travels? That this virus can travel? He said, Josh, I think it’s higher than people are putting odds on. That’s what we do, right. All we do is we’re trying to get a sense of what does the market think, and what do we think, and where are we willing to be different? So, January, February, we were already talking about the risks of coronavirus, and how it’s being way, way underreported from the Wuhan data that we were seeing. As it spread, again, we continue to do work, so then we respond February into March, our first reaction was play defense. What I mean by that is we were looking at the portfolio, February into March, looking at what are the companies that we think could be impacted on the supply chain side from the disruption in China because at that time, it was still contained to some extent to China, but we still had companies that had supply chain exposure to China.

Jackson: Perfect. So, Josh, you’re talking about how the portfolio and the team has held up and performed quite strongly in 2020. Can you talk a little bit about the

Conference Call 6/10