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Graham Griffin
Graham Griffin
Articles (111) 

Value Investing Live Recap: David Dietze

Key takeaways and questions

October 21, 2020 | About:

GuruFocus had the pleasure of hosting a presentation with David Dietze, the founder, president and chief investment strategist at Point View Wealth Management Inc. Dietze was joined by Fritz Schoenhut, who is the Managing Director and Portfolio Manager at Point View.

Point View Wealth Management is an SEC registered investment adviser and part of Peapack Private, the wealth management division of Peapack-Gladstone Bank, managing over $7 billion, primarily in separately managed accounts. Point View provides fee-only independent customized portfolio management services.

Using extensive research and sound investment principles, the firm strives to produce superior returns for its clients in a way that accords with their individual goals and risk tolerances. It does this by constructing a comprehensive investment strategy, using the appropriate combination of stocks, bonds and mutual funds for each client.

Point View's equity investment approach is to search for those that appear inexpensive relative to their fundamentals. The firm looks for investments that maximize the earnings to which each dollar of investment outlay is entitled. Of course, it also takes into consideration other fundamental factors, including market position and strategy, quality of management, growth prospects and margins. The fund managers try to minimize exposure to companies with excessive debt levels. They want to know what the companies are doing with their cash flow and that they are making use of it in an appropriate manner. Based on historical research, they believe a value-based approach delivers superior returns with less risk and more income.

Watch the full video here:

Key takeaways

The Point View team likes to focus directly on the holdings they are involved with. This means that they avoid exchange-traded funds so that they can know exactly what their portfolios hold. Since their portfolios are tailored to each unique client, this allows them to accurately manage for tax efficiency, which is one of their primary goals.

When searching for investments, Dietze and Schoenhut take an all-cap approach. They look at all possibilities within the market rather than focusing on popular stocks that generally fall within the large- to mega-cap values. However, they take a long-only approach based upon fundamental bottom-up research.

Portfolios focus on diversification to help manage risk tolerances and avoid making "bets" as said by Schoenhut. Generally, a portfolio will be composed of 35 to 45 individual stocks and positions will be limited to 3% of the overall portfolio.

Both Dietze and Schoenhut adhere to the teachings of Benjamin Graham and Warren Buffett (Trades, Portfolio). They work to prepare for the unknown so that when something does happen, they are not caught off guard. Their investments cover all sectors and try to weight them equally while avoiding paying premium prices where they are unwarranted.

Stocks

Deitze walked the viewers through several different sectors and a stock pick that he believes offers value from each. The first sector he chose to look at was the energy sector and he chose Exxon Mobile Corp. (NYSE:XOM) as his example.

He explained that the energy sector has been beaten down due to the ongoing pandemic, yet Exxon has maintained its integration throughout all parts of the sector. As well, the company has nearly double the proven resources as competitor Chevron Corp. (NYSE:CVX) and potential future catalysts of cutting their dividends and pushing into new green initiatives.

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Schoenhut took a look at several different companies that he also believes offer up a good value investment. His first example took a look at Anheuser-Busch InBev SA/NV (NYSE:BUD), which he explained has seen value decline due to increased debt from acquisitions and a strong U.S. dollar.

Despite the value decline, he explained that there are multiple places to find opportunity within the company. On top of the 18 brands that generate over $1 billion a year in revenue each, the company has been able to innovate products to match changing consumer tastes. Additionally, the management team has put forth effort to help reduce the amount of leverage held against the company.

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Questions

The duo took many thought-provoking questions from the audience, including one regarding whether they saw pressure from clients to invest in popular and high-growth stocks that are constantly making headlines.

Dietze took the question head on and explained that you really have to know yourself as an investor and choose to do what will best benefit your client. Sometimes that means taking the hard road and explaining the decision fully even though it would be easier to purchase a few shares and have them stop asking.

Schoenhut also fielded a question regarding the effect that inflation has on stocks and how it comes into play when investing. He explained that inflation affects everything from interest rates on bonds to estimations on future earnings for companies.

He believes that the Federal Reserve has constantly pushed inflation as much as possible, but that it has been very stubborn to rise. This in turn has created a situation in which many investors might be underestimating the potential for an "inflation surprise." If that surprise came to be a reality, interest rates could be raised suddenly and create a headwind for stocks.

Disclaimer: Author owns no stocks mentioned.

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