Latest / Bloomberg Intelligence / Eaton Vance's Piantedosi: Opportunity in Pinnacle Foods (Audio)

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Eaton Vance's Piantedosi: Opportunity in Pinnacle Foods (Audio) · Bloomberg Intelligence

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  Speaker 1: since its launched. That's your Bloomberg ETF report. I'm Katherine Cowdery.
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  Speaker 1: You're listening to Taking Stock with Kathleen Hayes and pimp
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  Speaker 1: Box on Bloomberg Radio. Google Alphabet, the parent company of Google,
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  Speaker 1: just announcing that the Chrome operating system will open up
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  Speaker 1: to Android app developers this June. Google, of course hoping
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  Speaker 1: that within a couple of months apps will move to
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  Speaker 1: a stable beta release and then finally work on all
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  Speaker 1: Chrome books this fall. All right, you think that's not relevant, Well,
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  Speaker 1: let's find out more from Lou Pianta Dosi. He is
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  Speaker 1: vice president and director of Growth Equity at Eton Vance.
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  Speaker 1: They have about three hundred billion dollars under management. He
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  Speaker 1: joins us from Boston. Right now, Lou, thanks very much
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  Speaker 1: for being with us. Thanks for having me him. All right,
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  Speaker 1: so tell me about Google Alphabet. I mentioned this idea
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  Speaker 1: of the convergence between Android and Chrome. Is that important?
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  Speaker 1: For the future of the Google ecosystem. Well, I I
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  Speaker 1: think so. I mean, when you look at the segments
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  Speaker 1: that Google competes in, you know, these are these are
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  Speaker 1: huge markets, huge opportunities. Uh. And Google has displayed tremendous
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  Speaker 1: leadership in all those areas. Uh. You know, their business
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  Speaker 1: is growing quite rapidly and uh you know, I think
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  Speaker 1: that they've got one of the best management teams in
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  Speaker 1: the business as well. Well. In fact, you are among
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  Speaker 1: those who say that they are the well you said
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  Speaker 1: it last year, people that Morgan Stanley's Ruth poor atte
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  Speaker 1: you know, she came over as the news CFO, etcetera
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  Speaker 1: while ago. Is is she one of the people you're
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  Speaker 1: referring to that it is this higher bearing fruit when
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  Speaker 1: you see things like this latest deal. Yeah, no, I
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  Speaker 1: think that's right. I think I think in in root
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  Speaker 1: Ports case, uh that uh, you know, they needed some
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  Speaker 1: some fiscal discipline, so to speak, and she has certainly
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  Speaker 1: brought that to the table. Um and uh, you know,
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  Speaker 1: to be more disciplined in the way they spend uh,
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  Speaker 1: in how they allocate capital is a big part of
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  Speaker 1: the story going forward. You know, there's lots of great
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  Speaker 1: projects that they're working on But you can't, you know,
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  Speaker 1: you can't throw money away, shareholder money away, willy nilly.
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  Speaker 1: It's got to have a purpose and it's got to
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  Speaker 1: have a reason. And she's certainly bringing that kind of
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  Speaker 1: discipline to the process. Lou brings some of your discipline
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  Speaker 1: to the process of managing the Eaton Vance Growth Fund.
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  Speaker 1: The symbol there is e a l c X. And
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  Speaker 1: I note, for example, that you have a very large
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  Speaker 1: holding in Facebook. Yes, we do, that's right. I think.
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  Speaker 1: I think one of the things that maybe differentiate us
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  Speaker 1: from the crowd, uh is our focus on long term investing. Uh.
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  Speaker 1: You know, it's seems like people get kind of caught
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  Speaker 1: up in the day to day noise of the markets,
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  Speaker 1: and you know, we've got kind of a trader's mentality
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  Speaker 1: in the marketplace where your average holding period uh you
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  Speaker 1: know declines uh to to sometimes minutes rather than years. Um.
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  Speaker 1: But I think our strategy where we tend to add
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  Speaker 1: value is to find these big picture, secular trends uh
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  Speaker 1: that can act as a tailwind to growth, uh, you know,
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  Speaker 1: for the companies that participate in these these trends. So
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  Speaker 1: again you mentioned Google, you mentioned Facebook, and these are
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  Speaker 1: you know, the shift in the global advertising market from
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  Speaker 1: traditional media to digital is one of the biggest secular
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  Speaker 1: trends out there right now. And those are the two
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  Speaker 1: companies that are the biggest beneficiaries of of that trend.
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  Speaker 1: Blue UH. Apple is a prominent player in your Focus
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  Speaker 1: Growth Opportunities Fund and your broader growth fund. Now a
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  Speaker 1: lot of people are questioning growth at Apple, you know, Uh,
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  Speaker 1: Tim Cook, the CEO, just made that billion dollar investment indeed,
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  Speaker 1: which is the equivalent of Uber in China. But people
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  Speaker 1: consider the iPhone to be more and more a great phone,
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  Speaker 1: but just not the got to replace it every time
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  Speaker 1: they come out with a new one kind of phone
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  Speaker 1: that it used to be. And their questioning growth at Apple.
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  Speaker 1: You still are very positive there, uh. You know, we
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  Speaker 1: look at the company's leadership position, the strong cash generation,
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  Speaker 1: and the significant UH balance sheets that they have, And
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  Speaker 1: while we agree that the growth in the near term
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  Speaker 1: appears limited within the smartphone market, UH, they certainly have
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  Speaker 1: a lot of flexibility going forward as to how to
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  Speaker 1: drive the next leg of growth going forward. And and
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  Speaker 1: while at the same time, your valuation UH is extremely attractive,
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  Speaker 1: won't if you could speak a little bit about newal
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  Speaker 1: brands based in Atlanta, and they all have a variety
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  Speaker 1: of brands that many people may not be familiar with.
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  Speaker 1: For example, they're a leader in writing instruments. Yeah, this
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  Speaker 1: is an interesting story and that people look at their uh,
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  Speaker 1: the stable of brands and just see a bunch of
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  Speaker 1: boring categories. And writing instruments is certainly is certainly you know,
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  Speaker 1: one that would appear to be a boring category. But
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  Speaker 1: through good management and in marketing, they've been able to
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  Speaker 1: grow that category in excess of you know, five six
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  Speaker 1: seven percent, uh, you know, on an annual basis, which
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  Speaker 1: is pretty pretty impressive, uh, given that it's it is
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  Speaker 1: what seemingly a difficult category. They've done that with a
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  Speaker 1: lot of their other brands as well, and they've recently
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  Speaker 1: made an acquisition of Jardin Company. They just closed on
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  Speaker 1: that acquisition last month. Uh. And there's quite a bit
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  Speaker 1: of synergies, not just from the cost side, from the
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  Speaker 1: revenue side as well, uh, in merging those two businesses together.
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  Speaker 1: So that's the name we like quite a bit as well.
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  Speaker 1: Amazon also your high A lot of people like Amazon.
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  Speaker 1: Of course, we were talking to an analyst who we
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  Speaker 1: were actually talking about Walmart right, And I guess that's
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  Speaker 1: what I want to juxtapose for you. You You like Amazon, Um,
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  Speaker 1: this analyst, this other analyst, Scott Muschkin, was saying how
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  Speaker 1: he thinks they're on the way to becoming a horizontal monopoly.
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  Speaker 1: Does that mean you say forget the old retailer's the
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  Speaker 1: old brick and mortar, you gotta go with the new. Well,
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  Speaker 1: again we get back to secular trends, and Amazon's a
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  Speaker 1: name we've owned for almost four years now, uh, and
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  Speaker 1: I have done quite well with it. But again, uh
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  Speaker 1: online Uh, spending online as a percent of total retail
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  Speaker 1: is still less than ten percent, but it's growing at
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  Speaker 1: five times the rate of the total retail pie and
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  Speaker 1: Amazon share within that continues to grow. So again we think,
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  Speaker 1: you know, the brick and mortar retailers, particularly in general merchandise,
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  Speaker 1: are going to be challenged. It doesn't mean there could
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  Speaker 1: be there can't be good trading opportunities within those areas.
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  Speaker 1: But I think from a long term perspective, Um, you know,
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  Speaker 1: it's going to be difficult for them to grow, whereas
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  Speaker 1: Amazon you can see that growth path continuing well into
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  Speaker 1: the future. You know, Lou, I just want to stick
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  Speaker 1: with brands for just a second, because I note this
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  Speaker 1: is almost like a theme for a lot of your
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  Speaker 1: investing ideas of Lassic Pickles, Bird's Eye, as well as Wishbone,
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  Speaker 1: Log Cabins, Smart Balance, Snyder Pretzels. Tell us a little
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  Speaker 1: bit about the brands that come unto the Pinnacle Foods umbrella. Yeah,
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  Speaker 1: you know what, one of the themes that we like
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  Speaker 1: to capitalize on is uh is undiscovered or undervalued growth opportunities.
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  Speaker 1: And you know, like I said, the perception of those brands,
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  Speaker 1: similar to Newell, is that there's not a lot of
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  Speaker 1: growth there, but with the right management team, uh, they
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  Speaker 1: can extract quite a bit of growth or better growth
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  Speaker 1: than most people expect. So again that's the play there
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  Speaker 1: with with with that one and that uh you know,
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  Speaker 1: these are these are well known brands, but to some
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  Speaker 1: extent maybe undermanaged. In with the right management, you can
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  Speaker 1: extract a lot more value out of them. And they've
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  Speaker 1: also got quite a few uh, healthy living type brands
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  Speaker 1: that can can move the needle going forward, and that's
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  Speaker 1: a big picture secular trend as well as people want
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  Speaker 1: to live and eat healthier going forward. All right, thank
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  Speaker 1: you so much for joining us. Lupiantados is vice president
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  Speaker 1: and director of Growth Equity at Eaton Vans Up in Boston.
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  Speaker 1: So we're heading for the clothes. Been a big day
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  Speaker 1: for Walmart, for urban outfitters, and this is a time
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  Speaker 1: when we've seen so many retailers under pressure. We'll be
• 10:56
  Speaker 1: looking at all the movers and shakers with our own
• 10:58
  Speaker 1: Dave Wilson are Stock Senator, will be back. We'll look
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  Speaker 1: at volatility in our vixed report as well. I'm Kathleen
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  Speaker 1: Hayes along with my co host Pim Fox. We're taking
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  Speaker 1: stock on Bloomberg Radio. H