Don Wordell is Managing Director of Ceredex, and portfolio manager of the RidgeWorth Mid Cap Value Fund, sat down to chat with Benzinga about his outlook on the markets and a few of his picks out there right now.
Wordell’s fund is long only and takes a bottom up focus, looking at attractive stocks that fit the fund’s criteria and works to build a successful portfolio from there.
The focus of the strategy is traditional value investing, with analysts spending 80 percent of their time digging into the fundamentals behind a business. This could range from calling suppliers and buyers to attending analyst days and roadshows to find that key piece of data to seal the deal.
To make the cut, stocks must meet three characteristics:
- Stocks must hit the right valuation metric;
- Stocks must pay a strong dividend;
- Most importantly, the fundamentals must be strong.
Despite having a bottom up focus, we had to ask what Wordell is seeing in the markets currently.
With the S&P 500 (NYSE: SPY) up over 28 percent over the last year, Benzinga asked Wordell some questions about the trends he sees out there.
Something that came across the Benzinga newsdesk recently was a trend of increasing dividends. Wordell echoed this sentiment, stating that this was a positive signal for the markets in his eyes. Raising a dividend is a signal that management is comfortable with its cash flow and willing to let loose a bit to reward shareholders.
Wordell has not been seeing an increase in secondary offerings as some bears have been warning could be a signal of a market top, and recommends asking the question of what a secondary offering really means.
Is it a PE firm exiting its position in the firm? Is it a company with a weak balance sheet trying to re-capitalize? All can be important indicators when reading into a firm’s secondary offering of shares.
While Wordell doesn’t necessarily like to comment on market conditions as a whole, he still sees a lot of great plays out in the market right now.
Stay tuned for Don Wordell’s top five picks.
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