By Carlos Santos
Investors who packed the first day of the sixth annual University of Virginia Investing Conference learned that public equities are the top investment alternative for the average person in the current, wacky economic climate.
The stock market is bulling ahead, but “what’s interesting is nobody is all that happy about it. It’s like they’re waiting for an anvil to fall out of the sky,” said Jason Trennert, the managing partner of Strategas Research Partners and its chief investment strategist.
Having said that, Trennert added: “My view is that public equities have become the only alternative for investors.”
The conference — which began yesterday at the University of Virginia Darden School of Business and will conclude today (Friday) — lures industry experts from around the world who help investors find the best strategies to deliver positive returns while managing investment risk. The event is hosted by Darden’s Center for Asset Management.
Trennert is bullish on the stock market for a number of reasons. One is that stocks are the last asset standing, with other investments, from bonds to real estate, delivering very little to nothing. Besides, “it’s the most accessible asset class for the average person,” he said.
So how does the average investor pick out the right stock when so many have risen so high? Richard Chilton Jr., the chair and chief executive officer of Chilton Investment Co., says market investors are always full of fear and anxiety. “But I believe we’re in a sweet spot and can use fear and anxiety to buy quality.”
Chilton says quality companies have pricing power — Tiffany never has sales, for example. Quality companies have high entry barriers, free cash flow and consistent revenue. They also have a unique boardroom DNA, which causes company leaders to consistently make the right decisions. Look for all those qualities, he says.
Chilton says investors should not be scared by market volatility. “Use the volatility as your friend,” he said. “You need enough confidence to be the owner of a stock, not a renter. Know your company.”
What’s the best unheralded stock in which to invest? “I knew you’d ask so I brought one,” he said. He offers up W.R. Grace & Co., which produces specialty chemical and materials as an overlooked, quality company.
The conference included three endowment experts — Don Lindsey, chief investment officer for The George Washington University; Scott Malpass, chief investment officer for the University of Notre Dame; and Ellen Shuman, who handled endowments at Yale University and the Carnegie Corp. of New York. She has since founded her own investment firm, Edgehill Endowment Partners.
Shuman said the key to endowment success is to find good managers “who can find securities priced lower than they’re worth.” And don’t be afraid to go against the grain. “Swim against the tide,” she advised.
Malpass says to be patient in investing. “We do value-based investing and long-term thinking.”
Lindsey says to “keep it simple. Know what you own and you’ll be okay.”
The day concluded with the announcement that Columbia Business School won the Darden @ Virginia Investing Challenge, comprised of 15 top business schools:
- Carnegie Mellon University (Tepper)
- Columbia Business School
- Cornell University (Johnson)
- Duke University (Fuqua)
- Emory University (Goizueta)
- New York University (Stern)
- Northwestern University (Kellogg)
- University of California, Los Angeles (Anderson)
- University of Chicago (Booth)
- University of North Carolina (Kenan-Flagler)
- University of Notre Dame (Mendoza)
- University of Pennsylvania (Wharton)
- University of Virginia (Darden)
- Vanderbilt University (Owen)
- Yale School of Management
The second annual event invited top business students to pitch a stock to either buy or short to a panel of investment management experts. The three Columbia students won a $3,000 cash prize.
About the Darden School of Business
The University of Virginia Darden School of Business is one of the world's leading business schools, offering MBA, Ph.D. and Executive Education programs. The unique Darden experience combines the case study method, top-ranked faculty whose research advances global managerial practice and business education, and a tight-knit learning environment to develop responsible and complete leaders who are ready to make an impact.
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