Clients’ values are as important as company financials when making investments, says advisor Jay Peroni. He likes the potential for ag-related names, as world population is growing, increasing the need for food.
So Jay, I want to start with what might be the obvious question to people listening or reading today: How would your particular message about investing apply to a wide audience of people saving for retirement or other objectives?
Jay Peroni: I am very much of the adage that you have to keep your costs low and find investments that you can control. You know exactly what you own and specifically look for things that can grow and produce income. That is generally what we help our clients do.
Kate Stalter: You manage a few different portfolios for your clients. Say a little bit about what those are, and what you are hoping to achieve with each one.
Jay Peroni: We have five different strategies that we follow for our clients, because we have found over the years that not every investor is the same. So we have come up with five different strategies for investors of all different walks of life.
We have an all-weather strategy, which is similar to a hedge fund. It is a combination of stocks, bonds, alternative investments, and cash that we help investors to kind of weather the ups and downs of the market.
We also have a contrarian strategy, which is deep value—looking for companies that have been kind of beaten down to have some good rebound potential. We also have Tomorrow’s Treasures portfolio, which is small and mid-sized companies that hopefully one day will grow to be larger and more successful companies.
We also have a Dueling Duo strategy, which is a momentum growth-based strategy looking at companies that are hitting close to their 52-week highs, that have the ability to continue growing.
Lastly, we also have a strategy called our Global Income, which is looking at companies that are paying strong dividends, that have a history of raising dividends. Generally, these companies pay at least a 3% dividend. So those are the five strategies that we help investors with.
Kate Stalter: Let me drill down a little more then, because one of the things that you do in your blog and in your podcast is to focus on specific ideas from these portfolios. You recently talked about some of the agricultural-related names. Tell us about your ideas for that sector.
Jay Peroni: If you look at the world population, it is not going anywhere but up. As the world, in the emerging markets especially, start to have more people that have money that are spending it on food, there is a demand for food around the world.
There have also been some world problems with flooding, drought, that really has harmed the food supply. So you have more people demanding food, and less food, and less land out there to actually farm. So I believe agriculture is going to be a strong play over the next three to five years and beyond.
So I’m looking at companies that have agricultural land. I look for companies that are producing and putting together fertilizers. I look for companies that are in the tractor business. So again, looking at anything that is related to the food business.
Kate Stalter: Any particular names in that sector that you especially like?
So those are a few names that are at the top of our list, as well as a Chilean mining and chemical company [Sociedad Química y Minera de Chile (NYSE:SQM)]. Those would be a few to take a look at.
Kate Stalter: You also recently had on your Web site a list of Top Ten stocks you like right now. Some of them sounded like names that wouldn’t necessarily be familiar to all investors. Tell us about a few of those.
Jay Peroni: Yeah, again we play on the agricultural theme. You will see CF Industries in there in the fertilizer space. You will see a company like John Deere & Company in there, helping with producing tractors around the world.
We also like some utilities in this space. So CenterPoint Energy (NYSE:CNP) is one that fills that void in that particular sector. Those are a few of the names that we have recently put out in our Top Ten stocks for 2012.
Kate Stalter: Finally, just to wrap up today, you also had some names, Jay, that you feel are best avoided. Tell us about a couple of those, and why those are not good ideas in your view.
Jay Peroni: We at Faith-Based Investors screen for investments that our clients can line up with their values. A lot of our clients have told us they don’t want any involvement in industries like tobacco, alcohol, and gambling.
So some of the names that don’t come through, and we certainly don’t buy for our clients, would be a company like…[Anheuser-Busch Inbev] Budweiser (NYSE:BUD) and Philip Morris (NYSE:PM) would be a couple we avoid.
Some of our clients don’t want to be involved in abortion either; so a company like Teva Pharmaceuticals (NASDAQ:TEVA) doesn’t make it through our screen. So those are from a moral perspective.
From a financial perspective, we are still staying away from the banking sector, just too much risk there in our opinion. So those are kind of the companies that we are avoiding right now.