INVESTING WHERE YOU DON’T WANT TO BE, WITH TOCQUEVILLE FUND’S CONTRARIAN MANAGER ROBERT KLEINSCHMIDT

June 30, 2017

In an exclusive interview, Tocqueville Fund’s contrarian investor, Robert Kleinschmidt explains why he is finding the best values where you don’t want to be.

WEALTHTRACK Episode #1402; Originally Broadcast on June 30, 2017


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ROBERT KLEINSCHMIDT

Consuelo Mack

This bull market, which has been chugging along with some fits and starts since 2009, has been called the least believed bull market in memory. This week it is experiencing one of those fits, with tech stocks under pressure and the naysayers out in force questioning the durability of the so called Trump rally.

There is no disputing the fact that the S&P 500’s advance accelerated with the election and took off after the inauguration.  The skeptics cite all sorts of reasons not to get on board: an unconventional president, sluggish economy, elevated stock and bond prices, legislative gridlock and geopolitical upheaval.

This week’s WEALTHTRACK guest says these are typical of the proverbial “wall of worry” that bull markets are known to scale and says there are changes that are not being well covered that could recharge the economy, corporate earnings and the market.

While legislation has been tough to pass, there has been a string of Trump administration actions repealing rules affecting a broad range of areas from mining  to workplace violations, to teacher standards to internet privacy to family planning and savings plans, to name a few.

Under the Obama administration rules and regulations reached record levels. One good measure is the annual page count of the Federal Register, the daily publication of the U.S. Federal government that issues proposed and final administrative regulations of federal agencies.

The Obama administration leads the top 10 list of most pages or regulations in a given year, starting with 2016 when there were 81,640 pages of rules, followed by 2010 when there were 81,405 pages and so on. The administration captured seven of the top ten records for numbers of annual rules and regulations.

According to our guest, Robert Kleinschmidt, even without legislation, less regulation is bullish for business, the economy and markets. Kleinschmidt is President, Chief Executive Officer and Chief Investment Officer of Tocqueville Asset Management, a value oriented wealth management firm devoted to capital appreciation and preservation for its global high net worth clients and institutions.

A small portion of its $11 billion in assets is in its Tocqueville mutual fund, which Kleinschmidt has managed since 1992. The fund has beaten the market and its peers since then with nearly 10% annualized returns vs. the S&P’s just over 9% returns, but along with many other value-oriented funds it has lagged the S&P over the last decade.

I began the interview by asking Kleinschmidt, what, if anything, has changed in the economy and markets in the age of Trump.

If you are unable to join us for the show on television, you can watch it on our website, WealthTrack.com over the weekend.  If you’d like to see it earlier, it is available to our PREMIUMsubscribers right now.

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Have a great weekend, a super Fourth of July and make the week ahead a profitable and a productive one!

Best regards,

Consuelo Mathews Asia

THINK LIKE A VALUE INVESTOR

  • Seek out what is unpopular
  • Frequently best opportunity

WORST PERFORMING S&P SECTOR (Year-to-date through 6/22/17)

  • Energy -15%
  • Oil & Gas Drilling – 38.3%

KLEINSCHMIDT: CONTRARIAN PLAY

  • SPDR S&P Oil & Gas Exploration & Production ETF (XOP)
  • Price: $31.50 on 6/28/17
  • 52-week range: $29.89 – $44.97

XOP Chart

XOP data by YCharts

CBL & & Associates Properties Inc (CBL) CBL Chart

CBL data by YCharts

Tractor Supply Co (TSCO) TSCO Chart

TSCO data by YCharts

SM Energy Co (SM) SM Chart

SM data by YCharts

One Investment on 2/5/16: SPDR S&P Metals & Mining ETF (XME) XME Chart

XME data by YCharts

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Robert Kleinschmidt from the WEALTHTRACK archives:

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SUMMER ENERGY

Contrarian value investor Robert Kleinschmidt was an oil and gas analyst before becoming a money manager. When we asked him for a summer reading recommendation he returned to the oil patch.


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