GuruFocus had the pleasure of hosting a presentation with Patrick Brennan, the founder and portfolio manager of Brennan Asset Management.
Brennan Asset Management LLC is a registered investment advisory firm based in Napa, California, which utilizes a concentrated value investing strategy. BAM manages separate accounts and is the sub-adviser for the Oceancross Capital Partners Fund. Brennan has given presentations at multiple value investing conferences, including presentations to The New York Society of Security Analysts (NYSSA), The Nebraska Society of Securities Analysts and presentations on various names at the VALUEx Vail Conferences. Brennan coauthored an article on tracking stocks with Lawrence Cunningham for The Financial History Magazine and was featured in a write-up of Liberty Latin America in The Private Investment Brief. Prior to founding Brennan Asset Management, he managed portfolios and led research efforts at two value investing firms in California: Hutchinson Capital Management and RBO & Co.
Previously, Brennan worked at Mark Boyar & Company, where he led the firm's research team and helped manage $800 million of assets across individual portfolios, institutional accounts and a mutual fund. He also worked for six years in investment banking and equity research with Deutsche Bank, CIBC World Markets and William Blair & Company. Brennan graduated summa cum laude from the University of Notre Dame with a degree in economics and was inducted into Phi Beta Kappa. He received the Chartered Financial Analyst (CFA) designation in 2002 and is a member of the CFA Institute (formerly AIMR). Brennan is originally from Omaha, Nebraska.
Watch the full stream here:
Key takeaways
Brennan kicked off his presentation with a brief overview of his firm, noting that despite having an all-cap strategy, it is highly concentrated. The firm focuses mostly on media, telecom, specialty financials and consumer discretionary stocks.
He then touched on major themes and market concerns, which included Russia’s invasion of Ukraine, higher inflation and interest rates and fears of a worldwide recession. Brennan also discussed the performance of value versus growth investing, as well as the performance of the U.S. compared to emerging markets like Latin America.
The investor then pivoted to discuss trends in the global cable business, especially in Latin America, and Irish banks.
Stocks
One company Brennan discussed in great detail was Liberty Latin America Ltd. (LILAK, Financial), a leading cable company that he said was hit hard by the Covid-19 pandemic and questions over its economic recovery.
Another attractive opportunity he highlighted was Millicom International Cellular SA (TIGO, Financial), a Latin American provider of fixed and mobile telecommunications services.
Questions
Brennan was asked a wide variety of questions by viewers, including one that was wondering if investing in consumer defensive stocks was better due to them being less cyclical that those in the industrials, tech and energy sectors. He replied that it is hard to answer as no one knows what the market will be like six months from now. Rather, he said it would be more effective to determine what your risk asset bucket is to begin with money that you ultimately need. From there, it is more a function of personal taste.
He also addressed whether or not Liberty Latin America’s high stock-based compensation for executives is a concern. Brennan said one thing to keep in mind is that it is a tricky issue. While it is a cause for concern, he is comforted by the fact that a large portion of its after-tax earnings are reinvested in the open market.
Another question was in regard to if he thought Irish banks like Permanent TSB (LSE:IL0A, Financial) will start to pay a dividend. Brennan said yes due to its potential earnings power, which is substantial.
