Discovering Value off the Beaten Path

I sent a last minute call to a good friend and great wholesaler Bob Leahy to see if I could meet two of the asset managers he represents.

Bill: “Bob, sorry for the last minute call. I’m going to be in Kentucky tomorrow. Can you arrange meetings with Andrew Beck from River Road and Tony Weber from Veredus?”

Bob: “Let me see what I can do”.

Bill: “I know Tony Weber / Veredus story. I want to make sure he’s sticking to his process in this miserable market.”

Bob: “Veredus has an open door policy; you’ll be more than welcome”.

Bill: “I’ve been watching River Road from a far. They’re numbers are great. I need to know their story.”

Bob: “Let me see what I can do.”

As always, Bob came through.

As I drove around downtown Louisville looking for River Road Asset Management, I wondered how many other advisors fly around the country looking for value. Couldn’t I just do a conference call like most advisors?

I showed up at their offices with a set of prepared questions. Like a reporter looking for a flaw in their story, I’d find out for sure if this was a boutique money manger.

As I sat in reception, River Road had posted in big letters on the wall, “Discovering Value, Off the Beaten Path”. Great tag line, I’ll need to borrow that one from time to time.

I got the tour of their office and was pleasantly surprised by two things. A board room table that was easily converted to a billiards table (I guess I want one of those for my office) and all employees were from the Kentucky area, even the CFAs and portfolio managers (Kentucky accent is hard to miss). I was expecting Wall Street types and ivory leaguers that were transplanted to Louisville. I was told that you had to be from the area to work at River Road. They want long term employees. I guess the typical blue-blood Yankee types don’t last long in Louisville. Interesting culture, hidden value possibly?

I received thorough presentation by Andrew Beck. Impressive, boutique to the core! Identifiable edge, structured sell discipline, unique story. River Road is able to find value in undiscovered, under-followed, and misunderstood companies via an absolute value strategy. If I were fishing for boutique money managers, I just caught another one.

Time was running short. I needed to get on the highway, head north, visit Veredus, and find time to procure some fine bottles of bourbon (another value quest) before heading back to Boston.

Not being from Louisville, the directions I had for Veredus was hard to follow. Had they told me of their proximity Ruth Chris Steak House, I would have found it instinctively, oh well.

I’ve been a fan and a client of Veredus for quite some time. I know their story, and have always been impressed with Tony Weber. I have had many meetings with the Todd Patterson (Director of Marketing) from Veredus, but had never met the master fund manager of Veredus Aggressive Growth and Veredus Select Equity.

Over lunch, I was schooled on theory earnings momentum. I probed for weakness in the theory, especially in this current volatile environment. “I been doing this successfully since 1980, I’m not changing my strategy”, stated Tony. Upon completion of presentation, I was more than convinced

The conversation quickly switched to bourbon (by me of course). The quest for bourbon began. Tony sent me to a secret location. I was to ask for John Smith (name changed to protect the innocent). Tell him, “Tony sent you”. Jackpot! 8 bottles of the finest, single barrel bourbons made their way back to Boston. Unfortunately, I need to check my luggage. Smuggled 8 bottles home, 7 made it all the way. One crashed and we had many unhappy pieces of luggage smelling like bourbon. Oh well!

What the hell is a boutique money manger?

While on a recent boat trip with friends, I was discussing the joy of finding some new boutique money mangers.

“What the hell is a boutique money manager”, asked my friend. I had never really had to explain it before; it was just an innate style that my firm had come to appreciate.

I took a sip of my Harpoon Ale, and said, “Here’s what its not: it’s not Fidelity, Federated or MassMutual. It’s not a company with a fund for every flavor under the sun. And, it’s never located on Wall Street. Boutique managers live off the beaten path. They have uncanny methods for managing money. They are disciplined and patient. They don’t rely on hunches, but stick to criteria. Most importantly, their performance is excellent and consistent”.

Hope that answers your question.