The Lead - "Winner Takes All"
- One of our primary investment tenets is investing in companies with exceptional returns on capital.
- A McKinsey Consulting study released this month highlighted that of the 6,000 companies with $1 billion or more in revenue, the top 10% capture 80% of the economic profits, the middle 80% essentially zero, and the bottom 10% destroy value.
- Equity Opportunity Group portfolios tend to have concentrations in sectors that have proved to be fertile areas of economic value creation.
Associate Spotlight - Tim Beyer
The Sterling Associate Spotlight for October features Tim Beyer, Managing Director & Portfolio Manager. Read more about Tim’s passion for working in asset management and what sparked his interest in the industry at a young age.View PDF
The Lead - "Defining Quality"
- As active managers we have heated debates on portfolio holdings, the most recent was on whether a security was a “quality” company.
- While quantitative metrics can try to measure quality, we believe there are shortcoming in merely screening for quality and “setting and forgetting." We highlight former holding General Electric as an example.
- We find having generalists with different perspectives but aligned goals helps in our pursuit of generating above average returns with below average risk.
Associate Spotlight - Lori McCartney
Lori is a Director & Regulatory and Risk Management Analyst and has been with Sterling since 2015. Take a look at her Q&A to learn more about how she started with Sterling, hear advice she would give her younger self, and even the one rule she would have everyone follow if she could.View PDF
The Lead - “Questioning Consensus”
- Assessing the opportunity in emerging market exposure at present requires “questioning consensus.”
- Several recent portfolio additions have various levels of exposure to these markets, with valuations appearing to start to balance risk and reward. We highlight one addition.
- These additions are consistent with our process noted since 2001 where we search for inexpensive quality companies where the fears of the crowd may be misplaced.
Casey McIntyre Joins Sterling as Chief Administrative Officer
Sterling Capital Management LLC (Sterling Capital) announced today that Casey McIntyre has joined the firm as its new Chief Administrative Officer.View PDF
Sterling Capital Welcomes Whitney Stewart
Sterling Capital is pleased to announce that Whitney Stewart, CFA joined the team as an Executive Director and Client Portfolio Manager in August 2018.View PDF
The Lead - "Where is the Big Money Looking to Move?"
- After a recent visit to the world’s largest consulting firm by one of our colleagues, we highlight the trend in looking for investment managers that protect capital as the economic cycle matures.
- Protecting capital has not been top of mind of many investors’ minds as the current bull market becomes the longest in history this month at 114 months per Strategas Research.
- We note that Sterling Equity Opportunities strategies have a history of protecting capital since their inception.
Associate Spotlight - Eddie Watson
Eddie is a Director and Sales Desk Manager and shares a bit about himself and the lessons he has learned throughout his career journey in this month's Q&A.View PDF
Associate Spotlight - J. Travis Pollack
Travis is a Director and Investment Analyst on the Advisory Solutions Team and has been with Sterling since 2005. Check out his Q&A to find out more about him and maybe even get some advice for starting a career in the investment industry.View PDF
The Lead - Value Versus Growth 2018
- “Growth” strategies have blown value oriented strategies out of the water in recent years. Value oriented strategies have underperformed dramatically in recent years if measured on a trailing 10 year basis.
- Currently, “value” stocks trade at one of the lowest relative valuations with improving relative profitability.
- Within Equity Income, Special Opportunities, SMID Opportunities, Insight, and Global Leaders portfolios new money in the first half of the year was placed in stocks where the average price-to-earnings ratio was below the S&P 500, the average growth rate last year was twice that of the S&P 500 and consistent with improving fundamentals, the average return on equity for these purchases increased 40% since 2015.
Charles Durham Joins Sterling as Chief Compliance Officer
Sterling Capital Management LLC (Sterling Capital) announced today that Charles “Charlie” Durham has joined the firm as the new Chief Compliance Officer. Charlie is also the new Chief Compliance Officer of the Sterling Capital Funds. He brings over 15 years of compliance and regulatory experience to Sterling Capital.View PDF
Strategies for a Rising Interest Rate Environment
While rising interest rates may present challenges to bond investors, history shows that a diversified fixed income portfolio can weather difficult periods remarkably well. Read more to find out how we navigate a rising interest rate environment.View PDF
The Lead - "Where is the Opportunity?"
- We are finding more “opportunities” within the value pool in 2018. Since the beginning of the year, the average stock added to the five largest Equity Opportunity portfolios has a forward price-to–earnings ratio below that of the S&P 500.
- Does Value look attractive relative to Growth if we include stocks that trade overseas? Yes. The MSCI World Value stocks trade at 15x earnings versus 25x for growth, the widest difference since 2006 according to Bloomberg.
Associate Spotlight - Farley C. Shiner
Farley C. Shiner is a Managing Director and Senior Client Strategist at Sterling Capital on our Equity Opportunities Team, focusing on operations, marketing and client service. Vie the PDF below to more about Farley and hear some fun stories about his years with Sterling Capital.View PDF
Associate Spotlight - Robert W. Bridges
Robert W. Bridges is an Executive Director, Portfolio Manager and is Co-Head of Factor Investing/Behavioral Finance. Bob has been an integral part of the Sterling team since 1996 and graciously shared a bit about himself in this month’s associate spotlight.View PDF
The Lead - "Focus on Quality Dividends Growers"
- Why own high quality dividend paying stocks in a potential rising rate environment? They have a history of outperforming those simply paying high yields.
- Over the past seven years, S&P 500 companies have increased their debt levels making stock selection more important than ever. This month one stock provided an example.
- Our core investment pillars of focusing on stocks growing quality earnings and dividends by winning in their markets rather than taking on debt to fund growth, should place our strategies to perform well in a rising rate environment.
Announcement For Broker Dealers
Starting May 14, 2018, Broker dealers will be required to disclose the mark-up and costs for many municipal securities transactions. The new MSRB rule primarily applies to same-day, offsetting principal trades for non-institutional customers. By enhancing the price transparency, retail investors can better assess the true costs associated with purchasing individual bonds. Investment professionals can find more information on this Rule by visiting our Resource Center here.View PDF
Associate Spotlight - Michael P. McVicker
We are excited to continue our Monthly Associate Spotlight series with Executive Director & Portfolio Manager Michael P. McVicker. Mike has been with Sterling Capital since 1992 and is a member of our Fixed Income Team.View PDF
Associate Spotlight - George F. Shipp
George is the founder of Sterling’s Equity Opportunities Team and joined Sterling Capital Management as part of a business realignment in 2013. Here are a few things you may not already know about George.View PDF
The Return of Equity Market Volatility
After an almost unprecedented period of record low equity market volatility that began in late 2016, equity markets have experienced a sharp reversal from record highs set in late January 2018.View PDF
Tax Reform Insights and Implications
The most significant change to the U.S. tax code in over 30 years became official when the Tax Cuts and Jobs Act was signed into law on December 22, 2017.View PDF
Sterling Capital Funds Introduces the R6 Share Class
The Sterling Capital Funds added the R6 share class for seven of its mutual funds which offers eligible clients a share class without shareholder servicing fees or sales charges.View PDF
Sterling Capital Behavioral International Equity Fund Marks Three-Year Anniversary
Sterling Capital Behavioral International Equity Fund has ranked near the top of its peers in its respective Morningstar Foreign Large Value Category (based on total returns) for the three-year trailing period as of Dec. 31, 2017. The Fund’s Institutional shares class (SBIIX) received an overall five-star Morningstar Rating™ (based on risk-adjusted returns) and finished in the top 11 percent (out of 265 funds in its peer category) for the three-year period ending Dec. 31, 2017.View PDF