GuruFocus had the pleasure of hosting a presentation with St. Denis "Sandy" Villere III, partner and portfolio manager of Villere & Co.
Villere brings a compassionate understanding to each client. He wears his clients' hopes and concerns on his sleeve as he evaluates potential strategies for reaching their goals. He loves seeing when the strategies pay off and helping clients fulfill their dreams.
He's a voracious researcher with a quizzical mind, storing bits about the firm's portfolio companies. His detailed knowledge of investment prospects helps the Villere team make more informed decisions.
Villere joined the firm in 1999 to launch and manage its first mutual fund. He started his career as an institutional research analyst and equity sell-side analyst with Gerard Klauer Mattison, a Wall Street institutional equity research firm. He earned a B.S. in finance from Southern Methodist University. He is a member of the CFA Institute.
Villere has been frequently quoted by the Wall Street Journal, Associated Press and Reuters. He is a regular guest on Fox Business, CNBC and other financial media outlets.
He dedicates much of his personal time to New Orleans charities. As former president of Carrollton Boosters and current board member, he oversees 5,000 players in youth baseball, softball, basketball, soccer, flag football and lacrosse. He is the former board chairman of Trinity Episcopal School. He also serves on the board of Pro Bono Publico Foundation, helping the organization raise $1 million for New Orleans charter schools every year. In 2004, he was a co-founding trustee of Choice Foundation, where he served as treasurer. Villere is also on the advisory board at Resource Bank.
Watch the full presentation here:
Key takeaways
Villere kicked off his presentation with an overview of the firm and its current team. He explained how crucial it is to have his father and his depth of experience at the firm when enduring tough times. He then dove into his own background and told his story of attending the DLJ Growth Stock Conference during the dot-com bubble, where he learned to take a contrarian approach.
He transitioned to talk about how the firm handles client interactions and highlighted its focus on creating a unique plan to suit each client’s needs. He continued to explain that all securities chosen for a client's account are picked on a discretionary basis and the firm only invests in companies that fit within its process.
The firm’s process starts with an investable universe of around 3,500 different companies. These are then narrowed down to around 500 companies that actually fit within the firm’s investment criteria. Several research stages are implemented, including a vote by the investment committee, before the firm builds a client-specific portfolio of approximately 25 companies.
Portfolios are selective with investments and seek growth at a reasonable price. Villere continued to explain that the firm usually diversifies by sector and stocks are held an average of five years. Additionally, the firm works in fixed income, which usually is between 20% and 30% of the business, but Villere explained that it is turning its attention away from bonds due to recent inflationary factors.
Looking toward quality companies, Villere explained the firm focuses on companies with reasonable to low levels of debt that also show strong free cash flow. He heavily emphasized the flexibility that a company gains with free cash flow to support investors and make up for any mistakes. The team also works closely with management teams whenever possible and loves to see management teams that are invested in their own companies.
Stocks
Villere highlighted several different stocks during his presentation as examples to the audience of both current and past investments. His past investments examined his thought process behind the initial investment and eventually led to any sell decisions that were made. The companies covered include Carnival Corp. (CCL, Financial), Visa Inc. (V, Financial), Apple Inc. (AAPL, Financial) and Kansas City Southern (KSU, Financial).
Villere chose to use Pool Corp. (POOL, Financial) as his main example during his presentation. He explained how the company operates as a dominant force in its industry and is set up to maintain profits into the foreseeable future. The firm sold the company after it became overly cyclical, but dove back in and has been making solid profits since.
Questions
After his presentation, Villere took the time to answer many great questions that came in from the audience. The first question asked him if he thought that consumer defensive stocks make for good investments during uncertain times.
He explained that these companies offer some solid opportunities during uncertain times and have the flexibility to overcome struggles. A company like Flowers Foods Inc. (FLO, Financial), as suggested in the question, could raise its prices to keep up with inflation. These companies also offer attractive dividends that will continue to bring money to investors. Villere concluded his explanation with the recommendation that investors take a look at Reynolds Consumer Products Inc. (REYN, Financial) for a potential staple company that could serve up stable returns.
Another question asked if Villere was interested in cryptocurrency at all and if had considered putting any money into the different options. His explanation came in twofold, starting with him explaining that he loves technology and the idea of blockchain.
He continued to explain that he finds it hard to work past the fact that there is no backing to support the value of things like bitcoin. He stays away because he cannot determine the intrinsic value of cryptocurrencies and the market has been saturated with many different options. Overall, it seems like the downside of investing in crypto far outweighs the potential profit in his opinion.
