Video - Stock Selection
In this clip, Louis Wermenlinger, Vice-President and Director, Portfolio Management and one of our stock specialists, tells you more about the importance we place on stock selection. He here explains his investment management philosophy.
SUBJECT : Stock Selection
EXPERT : Louis Wermenlinger
VERSION : English
Note: The information in brackets "[...]" describes the visual and audio content of the video other than the dialogue or the narration.
[Elegant music begins. Different parts of Desjardins Securities' head office appear on screen including, primarily, the prestigious trading floor where many employees work. These images give way to a shot of the firm's logo and the dsia.ca website. This shot gives way to Mr. Louis Wermenlinger, whom we see appearing on a balcony overlooking the trading floor where employees are busy working].
Louis Wermenlinger (CA, MBA, CIM, Vice-President and Director, Portfolio Management - Brokerage and Private Management Division, Portfolio Manager): I’m pleased to present our first Desjardins Security Investment Briefing, in which I would like to brief you on my investment management philosophy.
I specialize in equities. I manage a number of portfolios for clients of Desjardins Securities and Desjardins Private Client Services. Despite the abundance of quantitative data used in market analysis, portfolio management is not an exact science. To obtain a good return on investment, a portfolio manager must identify trends and gauge future company earnings.That means a manager needs to have an investment style and a method, and stick with them.
My style is the value style. My portfolios are built from quality companies with reasonable valuations. I don’t buy companies with very high valuations. Their equity is at risk of a sharp depreciation if developments turn against them. One good example: Research in Motion. When I speak of the quality of a company, I’m thinking of able management with a good track record, a sound financial position assets in good condition, a strong competitive position, resilience in the face of cyclical downturns and a sustainable dividend.
The value style also means that I’m on the watch for undervalued equities. The bargains, in other words, where I can take a position and wait for the market to recognize the true value of the company. I’m patient. I invest for the medium and long term. In some portfolios I emphasize dividend income. Some companies do business in industries that are stable enough to allow a large portion of their profits to be distributed to shareholders. Hydro power producers is a good example. Hydroelectric dams sell in advance their capacities to utilities signing 15 to 20-years contracts with clauses protecting them from inflation.
When interest rates are low and financial market volatility is high, a portfolio of companies paying dividends between 4% and 6%, with potential for growth over time, as well as a low tax rate, is a good complement to conventional fixed income securities
[The music begins again. The dsia.ca website address appears in the middle of the screen and the following text appears at the bottom of the screen « Desjardins Wealth Management Securities is a trade name used by Desjardins Securities Inc. Desjardins Securities Inc. is a member of the Investment Industry Regulatory Organization of Canada ( IIROC ) and the Canadian Investor Protection Fund (CIPF). ». These images end with the Desjardins Securities logo. ]