Chuck Royce: Finding Opportunities in Brands

We’ve got to lean towards lower valuations. So I will be emphasizing that. A theme we’ve had a good experience with over long periods of time is brands, and in this case, we like Ralph Lauren, an extraordinary worldwide brand. They have a tremendous opportunity. They are managing the company better and better, and another would be Levi. We like what they’re doing and how that’s working out. So these are examples of companies in great condition now, and I think will prosper in the next year or so.

And then another area that we’ve had positive experience in is in the auction area of cars. We had a very successful, long-term, five, ten-bagger with Copart, and we think maybe we can do the same thing with IAA, which is in a similar business. They’re not as jazzy as Copart, but we believe they have the same possibilities for a great half a dozen years.

Jim Stoeffel: Seeing Prospects in Industries Hit by Supply Chain Issues

We talk about this as a team just about every day, from a broad perspective I think every industry that’s been negatively impacted by the supply chain issues, and what’s going on in terms of shutdowns will benefit, because I think a year from now, one way or the other it’s going to get fixed. Whether it’s tech where demand remains still pretty good, but they can’t get the product out the door, same thing with industrials where you had these supply chain issues, and it’s incredibly expensive for the company to deal with it. So I think all of those things will benefit.

The one thing I think is a little bit outside the box is energy efficiency, and we’re finding a lot of interesting ideas there because I think it’s fallen off people’s radar screens a little bit. If we’re going to ultimately move away from fossil fuels, we’re going to have to have a very efficient energy infrastructure, which I don’t think we have right now. Charging these vehicles takes a lot of energy, and we’re going to have to correct that. So I think that’ll be a really intriguing idea over the next year or so.

Steven McBoyle: Taking Advantage of Capital Spending

I believe the strength of U.S. capital spending is underestimated and absolutely an investment theme. Capital spending has taken on heightened strategic importance. Corporations today envision it as being an ability to enhance organic growth, particularly in developed countries, and proximity and simplification of value chains also play into that particular theme. But the simple fact is U.S. manufacturing construction spending through the end of March year-to-date is up over 160%, and estimates have it such that by the time we exit ’23, going into ’24, that number will be over 300%. There is a tsunami of capital spending coming to the U.S. So I think that is an absolute investable theme.

Mark Fischer: Buying a COVID Hangover Business

Pet-related businesses. Why? This is a great example of a type of business that I would call a COVID hangover stock. People purchased companion animals at unprecedented rates during the early stages of lockdown, but now that the pandemic is waning, many investors are treating these stocks as though the pets had vanished from the face of the earth, never to come back. Of course, that’s not the case. Unlike the Peloton that’s collecting dust in your cellar, lots of these pets will continue to generate reoccurring revenues for many years to come.

These businesses will benefit from two features that I think are particularly noteworthy. One is immense customer loyalty. So people treat their companion animals as though they are part of the family. They have immense emotional attachment to these pets, and so once they’ve found a solution that works for these pets, they’re very unlikely to switch, and the second characteristic, which is related to the first, is pricing power. People, again, treat their pets as though they’re part of the family. They want what’s best for them. They’re less price sensitive. So pet-related businesses that provide foods, medicines, services, they have the ability to raise prices.

VIEW FUND PERFORMANCE

Important Disclosure Information