Tuesday, November 10, 2015

AIM/FMA/Investment Club Welcome Tom Pence of Wells Capital Management

Tom Pence, Wells Capital Management

On Monday, November 9, 2015, nearly 200 students attended a presentation by Tom Pence and Tom Askey in Marquette University’s Alumni Memorial Union. Tom Pence, CFA, is the Managing Director and Senior Portfolio Manager of Wells Fargo’s Fundamental Growth funds in Indianapolis. Tom Askey, CFA, Research Analyst for Mr. Pence’s team, also spoke to the students. The title of their presentation was “Generating Growth Alpha in a Slow Growth World.”

In addition to talking about the Wells Fargo Asset Management Analyst program, Mr. Pence addressed some timely investment topics, including: Short vs. Long-Term Focused Investing; Investing for Growth in a Slow Growth World; and Building a Portfolio that will last through the cycle.

The content of the talk touched on the importance of analysts developing the discipline to develop long-term thinking and to not get overly focused on a firm’s quarterly earnings. Mr. Pence emphasized that the most reliable alpha requires a commitment to longer-term thinking and encouraged students to find situations where there is a “change dynamic” taking place. He said for the students to “be early to find and identify change.”

Marquette Finance Students at the Pence Presentation
Mr. Pence identified an interesting investment decision marking model that he noted was based on the work of Herbert Simon in his publication The New Science of Management Decision. Examples of firms that are on different parts of the wave of change brought the point home to the students – including discussions about Apple, SEIC, WOOF, and BFAM – companies that are at interesting points on the ‘change wave.’

Tom Askey, Wells Capital Management
Noting that identifying growth in the post-2008 financial crisis world is more challenging, Mr. Pence told the students to utilize Porter’s 5 Forces and to screen for companies with pricing power, wide moats and strong cash flow. He also discussed factor analysis and observed that over the past several years growth has not been rewarded --- emphasizing that balanced portfolio construction is important to prosper across the business cycle.

Dr. David Krause, AIM program director, and Mr. Pence summarized the talk and were available to answer questions afterwards. The presentation offered the finance majors an opportunity to hear from one of the nationally recognized thought leaders in the world of equity investing. Krause added, “It was a pleasure to host Tom Pence and to continue to expand our relationship with Wells Capital. Ryan Woo, a member of the AIM Class of 2016, will be joining the Pence team full-time next summer and we are hopeful to add a summer intern to the Indianapolis-based team. It was wonderful to see Tom and his research assistant, Tom Askey, on campus.”

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