Nadim Rizk, Lead Portfolio Manager, CEO, and CIO of PineStone Asset Management, joined Keith Black, Managing Director of RIA Channel, to discuss concentrated investing in global equity markets.
Nadim Rizk has had a lifelong interest in investing, which led him to a career as a buy-side research analyst and portfolio manager in global equities. After over 25 years of investment management, Rizk realized his dream of starting a new firm at PineStone, which is employee owned.
PineStone offers three concentrated equity strategies. The US strategy will hold 20 to 30 stocks, while the international and global strategies will hold 25 to 35 stocks each. A result of investing with a private mindset leads to holding periods of 10 to 25 years. As a long-term investor with relatively small portfolios, PineStone carefully investigates and monitors each company for both financial and non-financial factors, with the firm getting involved with governance and board composition issues. Rizk and his team take the time to carefully research each stock independent of the information and opinions published by sell-side analysts. The role of the research team is to cover the 50 stocks held by the firm as well as 10 to 20 stocks being considered for future purchase. It can be time consuming to cover this number of stocks, which requires meeting with management and reading all of the published financial statements and management reports.
Rizk highlights two portfolio holdings, one from the US and one from the international portfolio. In the US, Rizk is a long-term holder of AutoZone, which is special because of their ability to manage a large variety of auto parts with near instant delivery. He invested in Taiwan Semiconductor in 2006, which is an attractive holding due to its quality and leading-edge technology and the ability to both design and manufacture semiconductors.
PineStone implements a patient strategy, seeking to benefit from long-term capital compounding by investing in companies with strong management and capital discipline. The concentrated long-term nature of the portfolio is designed for long-term capital appreciation with returns that may not closely track benchmark returns in any given year. Rather than invest in home run stocks that far outpace the market for a short period of time, Rizk seeks to hit singles and doubles to earn consistent returns in the long run and avoid permanent capital losses by investing in companies that he hopes will still be strong performers in twenty years.
Resources:
NYLI PineStone International Equity Fund
NYLI PineStone Global Equity Fund
NYLI PineStone U.S. Equity Fund
About Risk:
All investments are subject to market risk, including possible loss of principal. Foreign securities can be subject to greater risks than U.S. investments, including currency fluctuations, less liquid trading markets, greater price volatility, political and economic instability, less publicly available information, and changes in tax or currency laws or monetary policy. These risks are likely to be greater for emerging markets than in developed markets. Because the Fund typically invests in relatively few holdings, a larger percentage of its assets may be invested in a particular issuer or in fewer companies than is typical of other mutual funds. This may increase volatility of the Fund’s NAVs. The Fund will be more susceptible to adverse economic, political, regulatory or market developments affecting a single issuer than a fund that is invested more broadly. The investment strategies, practices and risk analyses used by the Subadvisor may not produce the desired results or expected returns. The investments selected by the Subadvisor may underperform the market in which the Fund invests or other investments. The Fund may also invest in securities issued by other investment companies which may subject the Fund indirectly to the risks of that investment company. The Fund also will bear its share of the underlying investment company’s fees and expenses, which are in addition to the Fund’s own fees and expenses.
Consider the Funds’ investment objectives, risks, charges, and expenses carefully before investing. The prospectus and summary prospectus include this and other information about the Funds and are available by visiting www.NYLInvestments.com. Read the prospectus carefully before investing.
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