Dustin Haygood of Aristotle - Value Investing and the Power of Patience

Today on the podcast, Rusty and Robyn are joined by Dustin Haygood, Client Portfolio Manager at Aristotle Capital Management. Dustin Haygood is a Client Portfolio Manager at Aristotle Capital and a member of the investment team. Prior to joining Aristotle Capital, Dustin was Lead Analyst at Capital Alpha Partners where he performed political risk research for institutional investors. Additionally, during his master’s program, he interned in client service at Pacific Investment Management Company (PIMCO). Beyond his experience in investment management, Dustin previously worked in politics as both a lobbyist and a Capitol Hill staffer. Dustin earned his Bachelor of Arts degree in Political Science from the University of California, San Diego and his MBA in Analytical Finance and Economics from the University of Chicago Booth School of Business. He is a CFA® charterholder. Dustin is also an avid golfer, mediocre skier and a lifelong Los Angeles Dodgers fan.

Key Takeaways

• [03:58] - Dustin’s professional background and more on his current role as a client portfolio manager at Aristotle
• [07:23] - What is “the power of patience” vital to Aristotle’s investment philosophy?
• [07:57] - Given Dustin’s unique background, what has surprised him the most about the impact of politics on the markets?
• [09:51] - What is the foundation for Aristotle’s investment research framework?
• [12:26] - Could companies, like those in commodity or energy businesses, that are historically capital intensive ever be considered quality?
• [14:30] - Does Aristotle’s focus on quality and valuation lead to consistent sector overweights and underweights in their portfolio?
• [16:15] - What gives Aristotle their traction, even if they fly under the radar at times?
• [18:04] - Does the rise of passive management present opportunities, or challenges, for Dustin’s team?
• [22:00] - What are Dustin’s thoughts on non-US equities?
• [24:06] - Are there specific regions or markets that Dustin is particularly excited about right now?
• [26:42] - Where is Dustin seeing value in Japan? Are there any interesting companies he can talk about?
• [29:26] - Given the deep, bottom up, fundamental research that Aristotle conducts, how long does it take for them to research companies?
• [32:30] - What will need to change for value investing to truly make a comeback and are we seeing the early signs of that shift?
• [35:24] - Do the traditional definitions of value still apply in today’s market?
• [36:55] - Many large tech companies have moved from growth to potentially value territory. How has this shift affected their approach to technology within value portfolios?
• [38:20] - In a market dominated by tech-driven narratives, what challenges does Dustin face when explaining value investment strategies to clients?
• [39:57] - What is currently Dustin’s favorite investment idea?

Quotes

[11:05] - “Here’s something unique too, valuation itself can’t be a catalyst for us - we don’t invest in a company just because it’s cheap. There have to be catalysts that are observable. So, things that are under the company’s control, that are already underway, that are fundamentally improving that business. So, it could be a business transformation, it could be the company expanding their margins in a meaningful way. Something else that we believe will help close the gap between price and intrinsic value. It needs to be grounded in reality though, so not hype, not a macro guess, not a political outcome.” ~ Dustin Haygood

[13:19] - “Quality isn’t static. It’s not just about where a company has been, it’s about where it’s headed…Can a capital intensive company be quality? In our view, yes it absolutely can. It depends on how well the company manages what it can control.” ~ .css-j9qmi7{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:row;-ms-flex-direction:row;flex-direction:row;font-weight:700;margin-bottom:1rem;margin-top:2.8rem;width:100%;-webkit-box-pack:start;-ms-flex-pack:start;-webkit-justify-content:start;justify-content:start;padding-left:5rem;}@media only screen and (max-width: 599px){.css-j9qmi7{padding-left:0;-webkit-box-pack:center;-ms-flex-pack:center;-webkit-justify-content:center;justify-content:center;}}.css-j9qmi7 svg{fill:#27292D;}.css-j9qmi7 .eagfbvw0{-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;color:#27292D;}