Latest / WTR Small-Cap Spotlight / A Unique Approach to Consumer Research: WTR Analyst Linda Bolton Weiser on Plans for Sector Coverage

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A Unique Approach to Consumer Research: WTR Analyst Linda Bolton Weiser on Plans for Sector Coverage · WTR Small-Cap Spotlight

• 0:00
  SPEAKER_00: Welcome to the WTR Small Cap Spotlight Podcast.
• 0:04
  SPEAKER_00: I'm your host, Tim Gerdeman, Vice Chair and Co-Founder and Chief Marketing Officer of Water Tower Research.
• 0:11
  SPEAKER_00: In today's Flashcast, I am joined by my colleague and WTR Managing Director, Consumer Sector Equity Research, Linda Boltonweiser.
• 0:20
  SPEAKER_00: Having recently joined WTR this past spring, Linda will share several thought-provoking ideas surrounding how she frames the consumer sector from her decades of Wall Street experience on both the buy side and sell side.
• 0:33
  SPEAKER_00: Ironically, Linda was one of my former valued clients in the early years of my prior equity research analyst career, so I'm truly honored to have her join WTR.
• 0:42
  SPEAKER_00: Good morning, Linda.
• 0:43
  SPEAKER_00: My colleagues and I are very excited to have you on board at WTR, and I'm pleased to host you on this uh first WTR formal podcast with me.
• 0:51
  SPEAKER_01: Thanks, Tim.
• 0:52
  SPEAKER_01: Yeah, it's it's a pleasure to be with you today, and it's great to be um having joined WTR recently.
• 0:59
  SPEAKER_01: So, in terms of my background, uh I've been an analyst for over 30 years.
• 1:04
  SPEAKER_01: Uh I actually started um on the buy side at Alliance Bernstein.
• 1:10
  SPEAKER_01: I covered chemicals, which is how we overlapped way back when.
• 1:14
  SPEAKER_01: I actually managed a fund there.
• 1:16
  SPEAKER_01: So I've got real life experience actually managing money.
• 1:19
  SPEAKER_01: It was the Alliance Global Environment Fund.
• 1:22
  SPEAKER_01: Um, I switched to the sell side because I really saw myself as more of an extroverted kind of marketer kind of personality.
• 1:30
  SPEAKER_01: I really enjoyed writing the reports and doing the modeling independently.
• 1:35
  SPEAKER_01: So I switched to the sell side and I also wanted to cover consumer.
• 1:39
  SPEAKER_01: You know, that's an area that women are the main purchasers of the products, and so I felt like I really understood that sector much better than chemicals.
• 1:47
  SPEAKER_01: Um, so then I spent about 20 years or so at just a few different broker dealer firms, including Oppenheimer, um, where I started, and that's uh where I covered mostly large cap stocks, and then I did some stints at other firms, including B.
• 2:03
  SPEAKER_01: Riley, and B.
• 2:04
  SPEAKER_01: Riley is known for doing small cap stocks, so that's where I picked up a lot of small cap coverage.
• 2:09
  SPEAKER_01: And so one of the things I'm I'm really thrilled about with Watertower is to be able to work with a colleague of mine who I've actually known for many years, Doug Lane and I, we're building a team here to cover hopefully a wide range of consumer stocks.
• 2:24
  SPEAKER_00: Such a perfect background to be on our platform.
• 2:26
  SPEAKER_00: So at Watertower Research, Linda, I know you've initiated coverage so far on Proctor and Gamble.
• 2:32
  SPEAKER_00: So the household and personal care or HPC space is clearly a focus.
• 2:36
  SPEAKER_00: Uh very curious, what are other areas of expertise and interest within consumer you'll be looking at?
• 2:42
  SPEAKER_01: Well, in terms of my past experience, you're totally right.
• 2:45
  SPEAKER_01: My specialty area was HPC, household and personal care.
• 2:49
  SPEAKER_01: So I did the usual large caps, PG, Colgate, Clorox.
• 2:54
  SPEAKER_01: Um, I really became known for my work in beauty.
• 2:57
  SPEAKER_01: Um, and there are a lot of small and mid-cap stocks in that space, including Interparfume, ELF, Cody, Sally Beauty, a lot of things to keep busy with there.
• 3:07
  SPEAKER_01: Um, I also did in my past um uh a focus on fitness and weight loss.
• 3:12
  SPEAKER_01: So I covered Weight Watchers, Beach Body, Neutral System, Planet Fitness.
• 3:17
  SPEAKER_01: Um, I did Kitchenware where there's Helen of Troy and Lifetime Brands and Newell Rubber Made, and then toy um sector was another one that I really focused a lot on, and also the OTC drug space.
• 3:31
  SPEAKER_01: So you can see I've done a lot of different things within consumer.
• 3:35
  SPEAKER_00: Those are a lot of household names I know well.
• 3:37
  SPEAKER_00: So um, how did following such a wide range of companies build your knowledge base?
• 3:43
  SPEAKER_01: Well, actually, even though it's consumer, within consumer, I I all the companies I followed, a lot of them have different business models.
• 3:51
  SPEAKER_01: So, in particular, I have expertise in the direct selling business model, as does my colleague Doug Lane.
• 3:58
  SPEAKER_01: Um, e-commerce, uh, I've followed some e-commerce companies, of course, traditional brick and mortar uh retailers, and also the franchise business model I have experience with.
• 4:10
  SPEAKER_01: Um, many of the companies I've covered are multinational companies.
• 4:14
  SPEAKER_01: So I've dealt with a number of kind of big issues over the years that have affected the companies, you know, Chinese government regulations, currency devaluations, and of course, more recently, tariffs.
• 4:26
  SPEAKER_00: Great.
• 4:27
  SPEAKER_00: And uh, out of curiosity, what do you think made your research stand out from the pack and will continue to moving forward?
• 4:34
  SPEAKER_01: Well, early on as a buy-sider, um, I learned to carefully examine cash flow as a real indicator of the health of a company.
• 4:43
  SPEAKER_01: So I think they've I've carried that forward into my work as a sell site analyst.
• 4:47
  SPEAKER_01: Um I also uh have done a lot of and will continue to do um proprietary store checks, um, especially in the beauty and toy spaces.
• 4:57
  SPEAKER_01: Those are really helpful to investors.
• 5:00
  SPEAKER_01: I've used um online data to gain insights.
• 5:03
  SPEAKER_01: For example, one of the things we did was um looking at social media followers of beauty brands and then doing a ranking of beauty brands based on those followers.
• 5:13
  SPEAKER_00: That's pretty cool.
• 5:14
  SPEAKER_00: Um, how do you think you can further differentiate your research at Watertower Research moving forward?
• 5:20
  SPEAKER_01: Well, the the key thing that really excites me about water about the Watertower platform is the ability that I'll have to enhance the research content with more formats.
• 5:32
  SPEAKER_01: Um, for example, rather than just publish a store check report with data points and photos I've taken in the store, I can now, for example, do a video podcast so that investors can experience what I'm seeing in the store right along with me.
• 5:47
  SPEAKER_01: Um so this is a new and unique way for investors to learn about companies' brands and products.
• 5:53
  SPEAKER_01: It's really different.
• 5:54
  SPEAKER_01: Um, very excited about doing that.
• 5:56
  SPEAKER_01: And of course, Watertower's mission is to find more creative ways of communicating companies' stories to investors.
• 6:03
  SPEAKER_00: Yes, we were proud to be very, very early adopters of such technology and it does bring the stories to life in a sense.
• 6:10
  SPEAKER_00: So um drilling down a bit further, what do you plan to focus on with your equity research at Watertower Research?
• 6:17
  SPEAKER_01: Well, Tim, I wouldn't be surprised if a couple of beauty stocks show up on my coverage list.
• 6:22
  SPEAKER_01: Of course, Proctor, which I've already published, has a beauty business.
• 6:25
  SPEAKER_01: Um, Interparfum, ticker IPAR, has always been a favorite of mine in the fragrance space.
• 6:32
  SPEAKER_01: Um, and not many investors know about Waldencast.
• 6:36
  SPEAKER_01: W A L D is the ticker, and that's the company that owns the rapidly growing milk makeup brand.
• 6:43
  SPEAKER_01: Um, I've always liked turnaround stories in my career.
• 6:46
  SPEAKER_01: Skin Health Systems and Rocky Mountain Chocolate Factory are could be in that category there.
• 6:52
  SPEAKER_01: Um, and I think that growth companies that fund themselves through internally generated free cash flow tend to be ignored by Wall Street because they're not going to do big equity offerings.
• 7:04
  SPEAKER_01: Um, these some of some of the companies in that category are excellent companies.
• 7:07
  SPEAKER_01: So I'm looking at 5.1 Talk Online and WD40.
• 7:12
  SPEAKER_01: Those are a couple of good examples.
• 7:14
  SPEAKER_01: Um there are so many companies out there that I view as orphans, just don't get enough coverage from analysts.
• 7:22
  SPEAKER_01: Um companies like that would be Funco, Jack Specific, Regis, which uh has the Supercuts brand, Crowncraft, Sentient Technologies, and Alliance Entertainment all fall into that category.
• 7:35
  SPEAKER_00: Great.
• 7:36
  SPEAKER_00: Uh I'm excited to see how your uh research uh coverage list unfolds over time.
• 7:40
  SPEAKER_00: So um what excites you most about WTR's platform that actually ultimately attracted you to join our rapidly expanding business?
• 7:49
  SPEAKER_01: Well, Tim, when you know, when I worked at a uh for a broker dealer firm, um, you know, I would do fireside chat type QA sessions with management teams.
• 7:58
  SPEAKER_01: Um, but on those, you know, um events, we would only have a few participants.
• 8:04
  SPEAKER_01: Sometimes, you know, if I had 20, that would be uh considered a celebration of success.
• 8:09
  SPEAKER_01: And that's because it was a closed system.
• 8:12
  SPEAKER_01: It would only be paying clients who could participate in the events.
• 8:16
  SPEAKER_01: But here at Watertower, it's an open platform, meaning our reports, our podcasts, all the other online content is free to all investors.
• 8:25
  SPEAKER_01: So that's gonna capture a whole bunch of other investors that you know I really was not reaching before.
• 8:31
  SPEAKER_01: Um, so that would include family offices and RIAs, for example, as well as all types of institutional investors.
• 8:38
  SPEAKER_01: Um, Watertowers research gets uh thousands of viewers sometimes.
• 8:44
  SPEAKER_01: Um, that's the type of broad reach that, quite frankly, I never was getting in a broker dealer type model.
• 8:51
  SPEAKER_01: Um, and that's the kind of you know, exposure and broad reach that company managements want, quite frankly.
• 8:57
  SPEAKER_01: Um, so especially the consumer space where we have so many brands that everybody recognizes.
• 9:04
  SPEAKER_01: Um, and it's through our content, it's gonna make it possible for regular people out there who might think about investing in a consumer company, a brand they recognize, it's gonna help them understand some of the issues that make that that brand in that company a good investment.
• 9:22
  SPEAKER_00: Very interestingly, you just described our business model in a nutshell.
• 9:25
  SPEAKER_00: Um, excuse me, six and a half years ago when we founded the firm, the very first thing I did was trademark protect a tagline, which is research for the other 99%, which you just alluded to.
• 9:35
  SPEAKER_00: So we really flipped the script on traditional sell side research.
• 9:39
  SPEAKER_00: Um, so is there a recent piece of water tower consumer content you'd like to point our listeners to?
• 9:45
  SPEAKER_01: Um, yes, absolutely.
• 9:47
  SPEAKER_01: Um so I'm just getting started.
• 9:48
  SPEAKER_01: I've been here a short amount of time, but recently my colleague Doug Lane and I did put out our latest consumer monthly piece.
• 9:56
  SPEAKER_01: It's a very thorough piece, it's got some great stuff in there.
• 10:00
  SPEAKER_01: Um, we highlighted um the continuing strong participation trends in golf and outdoor recreation, an area where Doug is doing a lot of work.
• 10:09
  SPEAKER_01: Um, we also gave some detailed commentary on two stocks that I've been looking at 5.1 Talk Online and Rocky Mountain Chocolate Factory.
• 10:19
  SPEAKER_01: Um so you can check out this report and all our other consumer content in the consumer section tab on our website, www.watertowerresearch.com.
• 10:29
  SPEAKER_00: Okay, thank you for that.
• 10:30
  SPEAKER_00: And then finally, wrapping up, Linda, do you envision building knowledge in any areas that would be new coverage for you?
• 10:37
  SPEAKER_01: Well, Tim, never say never.
• 10:39
  SPEAKER_01: You know, I've done a lot of things, but there's still a lot of interesting things out there that I haven't looked at.
• 10:44
  SPEAKER_01: Um, two stocks are an area in particular that I think need more attention is watches.
• 10:50
  SPEAKER_01: Um, Mavado and Fossil are two companies that really don't have very much coverage at all.
• 10:55
  SPEAKER_01: Cannabis is another area, of course, that's that's growing and emerging.
• 10:59
  SPEAKER_01: And I that would be entirely new for me.
• 11:01
  SPEAKER_01: Who knows what the future brings, Tim?
• 11:04
  SPEAKER_00: Well, very good.
• 11:05
  SPEAKER_00: I really appreciate uh you giving us uh kind of your overarching view of the consumer sector for Wall Street investments, and uh I'm excited to have you on in the future to discuss uh many of your new ideas.
• 11:17
  SPEAKER_01: Great, thanks, Tim.
• 11:20
  SPEAKER_00: Thank you for listening, and don't forget to subscribe as well as visiting www.watertowerresearch.com to stay up to speed on the company's small cap written research reports, podcasts, fireside chats, industry specific symposiums, and conference schedules.
• 11:36
  SPEAKER_00: We will see you next time for another edition of the WTR Small Cap Spotlight Podcast.
• 11:42
  SPEAKER_00: Finally, a special thanks to the producer and editor of the podcast, Krista Fitzpatrick.