Deconstructing Alpha

Risk managed small-cap equity investing?  How to manage a large small-cap portfolio?   Can underperforming a bull market lead to multiple market environment outperformance?  For how long can poor quality businesses outperform?  Why is the beta ripping Russell 2000 Small Cap Index chock full of non-profitable companies?  

Do these questions sound like “Jumbo Shrimp”?   

We are fortunate enough to address these perplexing topics with Gregory Spiegel, Portfolio Manager of the $10 billion AUM – 30 plus year old – Neuberger Berman Genesis fund. 

Listen up and get wise folks. Time to go sit in traffic, take the dog for a walk, or just take a nap…

Please click here for a summary of the Neuberger Berman Genesis Fund’s investment risks, current performance data, including current to the most recent month end, and other important disclosures.

Inflation at 5%, 10-year treasury yields at 1.5%, how is that sustainable?  In the post-COVID investment environment of explosive growth coinciding with inflation concerns, it seems implausible that interest rates could remain this low.    

However, for my entire career, investors have decried, “Interest rates are just about to rise, so watch out!”.  But they haven’t.  Interest rates have been declining for 40 years.   

In this podcast, we interview Tony Crescenzi, Portfolio Manager and Investment Committee Member of PIMCO investments.  What better person could we have found to ponder this perplexing conundrum?  

Buckle up or grab the dog and go for a walk; this is not to be missed.

The big macro-economic surprise in 2021 is INFLATION!  The latest CPI-U year-over-year inflation print for the 12 months ending May 2021 is 5%. Regardless of whether the rise in general prices – influenced by the sectors of energy, lumber, or used cars – has been lumpy or not, it does appear that most of us are witnessing pockets of inflation in our lives.  And, inflation is contagious, inflation in one area often spills over into others.  

This current inflation appears to be an about-face from the decade of deflationary forces that languished through the decade prior to COVID.  The 2010s were characterized by slow growth, low inflation, and low-interest rates.  To combat the persistent slow and low economy, central banks around the world were unrelenting in their efforts to stimulate the world’s economy, which largely just led to rising asset prices.  Fast forward through one pandemic and one year later, and BOOM! An explosion in consumer demand and a disruption in supply.  Have we entered a new paradigm of demand and exceeding supply, or will we return to the old, oversupplied economy that we are all so used to?  In other words, is the inflation that we are witnessing transitory or persistent?

In this episode, we break this down.  What is happening with inflation, what does it mean to portfolios, how best to hedge against inflation, and is this inflation transient or persistent?

While you may have never heard of Frontier Asset Management, you likely have heard about MFS Funds. They manage about $500 billion in assets, and Rob Almeida is their Global Strategist!  Given that the big story for strategists now is clearly “what the heck is going on with markets”, we quickly devolve from “deconstructing alpha” to all the weirdness that is occurring at the macro level. And, as you know, everyone wants to talk macro, we just don’t want to admit it. There is also some great insight at the end of this episode where we have an “aha!” moment about socially responsible investing. 

In this episode, Geremy and Shannen interview Carl Kaufman, Co-President, Co-Chief Executive Officer, Chief Investment Officer of Osterweis funds, but more importantly, manager of the Osterweis Strategic Income Fund. With inflation fears on the horizon - leading to investors' big fear of rising interest rates - talking bonds, interest rates, and inflation couldn’t be more timely. And, who better to discuss this with than Carl Kaufman! While “deconstructing” the alpha that Osterweis seeks to provide, it becomes apparent that what this episode really uncovers:  the value of active management for bond investors.  

Geremy van Arkel of Frontier Asset Management,John Walthausen, CFA, Chief Investment Officer, and Portfolio Manager and Gerard Heffernan, Jr., CFA, Portfolio Manager of Walthausen & Co. LLC discuss long term success in security selection. 

Geremy van Arkel of Frontier Asset Management, Nelson Louie and Chris Burton of Credit Suisse Asset Management discuss what strategies have worked for commodities. 

Geremy van Arkel of Frontier Asset Management and George Shipp of Sterling Capital Management talk about the stock market and the U.S. economy. 

Frontier Asset Management’s conversation with Andy Rothman, Investment Strategist at Matthews International Capital Management. They discuss all things investing, China, COVID and the ramifications on the economy.