Which areas are you most optimistic about now?

In our high-quality zone, there’s two stocks we have, which both have brand names. Ralph Lauren is, we are impressed again by how they have managed through change. Very high-quality brand, with a loyal following. But they’ve adjusted to the needs of a hybrid marketplace. They very early on, very strongly, realized the importance of having direct sales to customers. And they are now a hybrid retailer, in a very successful way. And the brand is as strong as it’s always been.

I think it relates to the Amazon approach, came into the market, so ordering online became critical. They have figured that out in a way that many other brands have not. And I think they have not only figured out, but they’ve also decided that they can limit their physical locations and they have clamped that down dramatically. They’ve gotten rid of lesser brands buried inside the company. I think they’ve adapted well. And they, of course, continue to have an extraordinary growth, especially outside of the U.S. in Asia. And I’ve been absolutely pleased with how management has made this adjustment. Transitioning, that’s very hard to do. And in this transition, they have proven their merit.

Another one with a brand is Brunswick. Brunswick is in the water, recreational vehicle business in many ways. And we’re impressed by the breadth and diversity of their product line, how they’ve evolved, and changed. They’ve used it to do a roll-up; they’ve bought many brands. In many markets they are the number one or number two.

We think water sports have proven their value, their longevity. And they will continue outside of COVID in the more normal world. Water sports have proven to be a very important spending pattern for those that have discretionary income.

Another area that we are very interested in is banks. It was not historically something the firm has been strong in. But I have been convinced, with the help of Miles Lewis, that banks properly looked at can be an extraordinary opportunity.

BankUnited is a great example of that. It’s located in Florida. They have scale. They are the one other banks want to beat. And they are the ones that potentially could be acquired by other regional banks. They have growth, they have excellent management, they have excellent capital allocation, they’re buying their own stock, and they’re expanding into adjacent areas. Florida is experiencing population growth. It’s very important in the banking world to actually understand the underlying growth dynamics. And many banks don’t have growth dynamics; they just participate in the financial community. We have elected to say, by and large, our banks will be in growth areas, and this is a great example.

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