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Baird Investment Management Senior Portfolio Manager Chuck Severson on how to diversify to lower your risk yet still maximize your returns.
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Out of Fox Business exclusive from Milwaukee to tell us how he's doing -- -- checks each person senior portfolio manager at -- investment management and -- I I was really -- -- -- -- in.
What your fund is doing in particular because.
You are in a way a buy and hold guy in sector average stars helped for quite some time -- you don't take gigantic position -- -- certain names why is that.
-- -- thanks for having me in the program.
Delighted to be here.
So we really worked very hard to identify special businesses once that can really I'll grow and more importantly -- profit their peers over a long period of time.
We try to keep the fund very well diversified across 55 or sixty stocks and keep that diversity.
Excuse me the diversification.
Broadly done in order to help dampen volatility over time.
Well that you are very diverse and I just wanted to show our viewers some of your top holdings everything from a company called Plantronics which makes host.
Those earphones and things like that to Digital Realty Trust you'll -- Catalyst health.
But looking at at all of the names that you happen there.
My question becomes you know.
How do you capture the upside because you go for the mid caps and you have done extraordinarily well already you're up about 10% year over year.
But how do you capture the upside.
Of not emerging market stocks but emerging.
Mid cap names meaning -- just on the -- -- really growing them looking healthy.
Well I think we've done a very good job of that over time and we think that caps are really in the sweet spot of their long term growth curve.
They've been able to invest in all the things that will keep them very successful over time so research and development deepening management.
And and starting up new facilities.
So they can grow much faster than the small caps without as much volatility.
And far outpace the large cap stocks.
OK so so here you are actually outpacing the Russell 2000 were showing a -- chart of your fund and how it's doing compared.
And in a way -- -- the mid caps actually the Russell mid caps.
If it almost -- it but you can manage to get right above it which is certainly -- so let's get to some of the names that you like the best right here.
And we can start with fast and all which by the way is hitting an all time high today so.
I get nervous when I see this and I think where are we buying too high is just too rich.
Well fast -- -- a business that we've been involved with for very long time professed no operates side of 2500 locations.
Around the country.
And really serves industrial and construction markets.
Benefiting today from the very strong manufacturing numbers that we've seen recently.
And would benefit even more if the construction markets would pick up.
So we think fast -- continue to grow at fifteen to 20% a year -- comp store sales have actually been at that level for the better part of two years we think that can continue.
You know we should explain to people what they do because they are in a -- a little retail operation and that.
For example if you work at a certain companies sometimes they will have company specific tools we -- -- of vending machine.
And so I think we have a picture of one of those vending machines of people could get a sense of what they do whether it's electric -- my safety goggles.
Two.
Well what what we have for television -- -- my -- losses and who knows our let's.
We got up out about -- -- to step out.
All right let's get to oceaneering.
To mean this is a perfect name for a company that does ocean engineering.
That's exactly right it's probably the biggest position in the fund today.
It's a very specialized oil service business.
They.
Have a fleet of remotely operated vehicles that operate on the ocean floor helping to connect and complete oil wells.
And connecting them with their production facilities.
So there's very few people in the world that can do this and they are certainly benefiting from all the activity and very deep water.
Social truck again they've got the most of competitiveness to -- they're very few operations that can pull this off this up fifty this is it not just a 52 -- -- but yet another all time high.
Trees don't grow out of the sky help me here -- -- that this'll go even higher.
Well in order for the the major oil companies to continue to build out their reserves they have to continue to work.
In very deep very harsh conditions and that's where you can find the most of the oil.
Last stock TSE -- Tractor Supply company give me ten seconds on this one picture.
-- supplies about a thousand store chain that that helps hobby farmers and landowners with everything they need to -- to operate.
-- should be growing 8% a year in new stores -- grow earnings at least fifteen to 20%.
Okay I'm not a hobby farmer I could kill attacked us got great to have you thank you so much.
He's really quickly what kind of -- do charts on the funds.
The institutional class is 85 basis points and the investor class has a 25 basis point twelve B one fee okay it's important folks to always asked that question and 25 basis points is not high.
Look at his returns they have done well.
See if your financial person is charging more than that okay.
-- it's great to see thank you.
Faceless sexy person senior portfolio manager Baer investment management and like Jack of the vanguard would say do not pay high fees so that's a fair -- certain.
