In an exclusive interview, veteran contrarian investor Charlie Dreifus explains why he is not worried about recent stock market turbulence and where he is still finding high quality bargains.
WEALTHTRACK Episode #1213; Originally Broadcast on September 18, 2015
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- Guest Info
- Action Point
- One Investment
- Stock Mentions
- Video Archive
- Web Extra
- Portfolio Manager,
- Royce Special Equity Multi-Cap Fund
Up until the recent market correction, one of the key characteristics of the U.S. stock market had been narrow market leadership. Only a handful of stocks were responsible for the bulk of the S&P 500’s gains.
According to Strategas Research, the S&P’s top ten point contributors accounted for 95% of the market’s gains before the August pullback. And five of them, Amazon, Apple, Walt Disney, Facebook and the combined Class A and Class C shares of Google made up 69% of the markets pre-correction gains.
Needless to say, unless you owned those five names, you probably underperformed the S&P 500. On the flip side, during the late summer’s dramatic market decline, owning them really hurt.
This week we have an exclusive interview with veteran contrarian investor, Charlie Dreifus. Dreifus dives deep into the financial statements of companies to find values others don’t, and applies that discipline to two mutual funds he has run since their inception. He made his reputation with the Royce Special Equity Fund, for which he was named Morningstar’s Domestic-Stock Fund Manager of the Year in 2008. He closed the small cap fund to new investors in 2012 because he couldn’t find compelling values for new money coming in.
Always looking for good companies selling at low prices, Dreifus created the Royce Special Equity Multi-Cap Fund in 2010 to take advantage of what he still considers to be undervalued large cap stocks.
However, only one of his holdings, Apple was among the S&P’s top ten performers. As a result, even with nearly 9% annualized returns over the last 3 years the fund has substantially underperformed the market. It’s a discrepancy which Dreifus expects to occur periodically when growth stocks trump value. He will explain why he doesn’t expect that advantage to continue much longer and why he is not particularly nervous about the market’s recent turmoil. Incidentally he has been predicting for months that the Fed won’t raise rates until December and that it will be a nonevent when it does.
If you’d like to watch the show before it airs, it is available to our PREMIUM viewers on our website right now. Also, exclusively online, we’ll share an additional EXTRA interview with Dreifus, as well as his list of the “dividend aristocrats” he owns in his Royce Special Equity Multi-Cap Fund. A big believer in the power of compound dividends, 10 of the fund’s 26 companies have increased their dividends for more than 25 years in a row.
Thank you for watching. Have a great weekend and make the week ahead a profitable and productive one.
PUT THE POWER OF COMPOUNDING DIVIDENDS TO WORK FOR YOU
No Bookshelf titles this week.
Dreifus is a big believer in the power of compound dividends, which he has put to work in a major way in his Royce Special Equity Multi-Cap Fund. Of the 26 names in that portfolio as of June 30, 2015, 10 of them, or approximately 38% of the portfolio have increased their dividends for more than 25 years in a row. Here’s the portfolio’s dividend profile. Download the list here. [.pdf]
Dreifus is a big believer in the power of compound dividends, which he has put to work in a major way in his Royce Special Equity Multi-Cap Fund. Of the 26 names in that portfolio as of June 30, 2015, 10 of them, or approximately 38% of the portfolio have increased their dividends for more than 25 years in a row. Here’s the portfolio’s dividend profile.
Download the list here. [.pdf]
We tracked down Great Investor Charles Dreifus at the Munich airport for an update on his view of the stock market and large vs. small cap stocks in particular.
You might remember from previous WEALTHTRACK interviews that Dreifus, a Morningstar Domestic Stock Fund Manager of the Year has run the small and micro-cap focused Royce Special Equity Fund successfully for the last 16 years and that he convinced his boss, small-cap pioneer Chuck Royce to let him launch a large-cap focused fund, the Royce Special Equity Multi-Cap Fund in 2010.
On this week’s Consuelo Mack WealthTrack: a Great Investor who has made his name investing in small company stocks explains why he now favors large companies. Charlie Dreifus, the portfolio manager of the Royce Special Equity funds discusses where he is finding the greatest values in the market now.
For as long as he can remember Great Investor Charlie Dreifus loved numbers. As a child he asked his mother to read numbers to him instead of storybooks. But it wasn’t until he took Professor Abraham Briloff’s accounting course at Baruch College that Dreifus found his calling, what he calls deep dive accounting. Briloff, who became an accounting legend passed away recently at the age of 96. For Dreifus he was a father figure, mentor and life-long friend.