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The Fundamentals to Watch When Investing

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    Hodges Capital Management founder Don Hodges on how to improve investors’ strategies.

  • Duration 5:20
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But that said -- Is that January -- -- small caps often see happening a bit early January effect meaning they do really well but we're barely into -- January look what's happening my next guest loves small caps regardless of the time to gear.

Or anything that's happening in Washington he looks for several key drivers Don Hodges Hodges capital management founder chairman of the investment committee and portfolio manager.

Joining me now on a Fox Business exclusive from Dallas Texas and and -- it's so nice to see you happy new year.

Other people to know why they should listen to you.

You're Hodges small cap fund one year your performance up 21%.

Over three years up 19% annualized five years up 11% I like those returns howdy do it what's the macro picture here on your tricks -- A lot thank our sacred is just concentrating on.

Companies.

The resolves all sorts of information in the marketplace about what the market's gonna do or what's going on in Europe -- what's happening in Washington.

But we don't give a whole lot of credence to those findings although there are always a backdrop to what's going on.

But we spend our time researching companies and it's.

It's an endeavor that we pursue every day where we're talking to small and mid cap companies constantly we have five.

Re search analyst senator Dodd-Frank are very good.

And over the period of the last twelve months -- had about.

2100.

Contacts with companies him.

And I am.

That involves about 660.

And different companies but it's a question every search and focusing.

Having a passion for what's going on in companies.

Well look let's talk about that because you know and I think it's important to point out here.

You look at the intrinsic value of the company and those fundamentals.

Vs a headline and not not that FaceBook is a small cap -- today he would have tuned out.

The headline of what they were announcing and looked more at what are the what are their ad sales numbers etc.

so so if you were to pick those apart you look at what cash position.

I know you're concerned about debt you don't like big debt levels right.

Absolutely and that will occasionally.

Venture into a company that has quite a bit of -- if the other factors are so overwhelming that the dead isn't you know the big issues that.

But we start out basically very fundamentally working that that he.

The asset value of a company.

Their cash position.

The amount of debt they have.

The quality of their management.

They're just many many thing is that going to have value Wieting a company.

And there's every kind of company that you can imagine out there for us to look it.

Well see some of your most widely held stocks -- for example Cracker Barrel you also like Trinity Industries Chico's is up their viewpoint financial but.

-- a couple of your picks it -- three of them are now based.

Sort of -- a in a derivative weigh on the auto industry and one does nothing to do with automobiles but you -- below.

Below of course is an advertising company -- -- right so tell me about why you like this one and where you got the idea through the auto industry.

Well they -- basically was an investment because the stock.

-- entirely -- It sold down to a level over a dollar a share.

They own.

-- when he television stations.

-- Eleven of their markets.

There is durden and number one or number two in ranking.

Bill is a very fine and well -- on televisions.

Company.

And it generates a lot of cash it has our earnings.

They played a special dividend of 25 cents a share.

On top of -- regularly quarterly dividend of -- cents -- share.

This past December.

And it's it's a very healthy company.

And -- automobile business is.

Doing more advertising I think friend I've ever seen.

You can let me just let me interrupt your 'cause we put up Lithia group Lithia Motors you like them -- as well as some other plays.

You like group automotive.

-- don't -- what I look at some your financials viewpoint financials is something else you'd like.

But let's get to -- -- is -- we've got a couple seconds left what is it about this company it was some.

Focused on Fox Business yesterday and sure enough -- warrant your picking at how long have you -- what do you like about it.

I'm sorry I didn't understand your question about which company of Shoe Carnival.

Old Shoe Carnival.

Shoe Carnival is.

Of rapidly growing.

Shoe retailer.

We -- that they're gonna continue to have good growth on their own their opening a number of new stores every year.

The -- business.

Particularly the ladies.

Shoe business is very very healthy.

And -- -- did it could be a candidate already taken out some time.

Good to see of John thank you for joining us will put all your picks up on the FaceBook page Don Hodges of Hodges capital -- lemon here will be right I value -- --

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