IN TIMES OF CHAOS CHOOSE TO INNOVATE One of these is a leading global consumer products be unveiled at an upcoming analyst meeting. company offering creative solutions to consumers Our conclusion was that we should reestablish a through its diverse portfolio of well-recognized position in the company’s shares. All the elements and widely trusted housewares, health care and at the core of Stageline’s investment process—an home, and beauty brands. The company’s shares attractive valuation, evidence of a quality partner, had declined following a tepid earnings report and and a contrarian opportunity—were evident to us. concerns over the negative impact of potential That decision has proven to be a good one: The tariffs on the firm. We knew this company well, shares have performed well, and we continue to as we had owned shares in the past. We weren’t inclined to reinvest in it, though, because even hold them today. after the sell-off, its shares were priced above its long-term average. Our experience with CASPR has been favorable. We’ve used insights gained from CASPR research to uncover value in other stocks—including a However, CASPR’s repeated suggestions of this restaurant company, an HVAC company, and an stock encouraged us to take another look at the company’s future prospects. electronic components company. For us, machine learning—as demonstrated by CASPR—is an We considered the potential impacts of its possible innovative addition to our mosaic of approaches sale of select personal-care brands and of the for unearthing value. second phase of its growth plan, which would Driving innovation with our clients in mind When it comes to innovation, we embrace the concept of better, simpler, faster. One manifestation of this concept is CASPR, a tool our team is developing to supplement the native idea-generation capabilities of teams that manage fundamental investment strategies across “our firm. CASPR employs machine-learning methods upon a variety of digitized factors to continually improve the quality of its recommendations with experience and repetition. Here, quality means the ability to mimic the nuance and judgment that are employed by human professionals during the often time-consuming and inefficient phase of in-depth fundamental analysis. This part of the process is critical for separating winners from losers among potential portfolio candidates, yet fundamental investment teams have found it notoriously difficult to scale—until now. CASPR pursues more insights and better insights with greater speed than was possible before it and is fully adaptable to the unique success drivers of any fundamentally driven investment process. It is our intention to further develop this capability for the benefit of skilled teams, like Stageline’s, and ultimately for the benefit of our clients. Randy Mangelsen, CFA, CQF, FRM, PRM Co-Head, WFAM Investment Analytics Team 16