Take Five with Dan Veru of Palisade Capital Management

From the upcoming Twitter Inc. IPO to the prospects for the United States becoming energy independent, Dan Veru, chief investment officer at Palisade Capital Management LLC, has an investment angle to share.
OCT 29, 2013
From the upcoming Twitter Inc. IPO to the prospects for the United States becoming energy independent, Dan Veru, chief investment officer at Palisade Capital Management LLC, has an investment angle to share. Not even Washington's endless political bickering can seem to dampen his economic outlook. InvestmentNews: Twitter has announced a pre-initial public offering price range that values the as-yet-profitable company at more than $11 billion. What is your take on the upcoming Twitter public stock offering and the IPO market in general? Mr. Veru: I think the Twitter IPO will be hot because it's something everybody knows and many people use. There also is a heightened sense of not repeating the mistakes of the Facebook IPO, which was overpriced and very poorly executed. IPOs in general are picking up and being well-received by investors, which is a good gauge of increased risk taking by institutional and high-net-worth investors. InvestmentNews: What do you see happening in the third-quarter earnings season thus far? Mr. Veru: Large-cap companies are meeting or exceeding estimates. I believe over 60% of companies that are reporting have beaten expectations. To mute that a little bit, companies beating revenue expectations has been on the light side. That's consistent because it's been difficult to gin up organic top-line growth in an environment where [gross domestic product] growth remains uneven and muted. As far as the fourth quarter is concerned, we did put behind us the government budget talks and got the government back to work, and that's always good for confidence. InvestmentNews: We are more than five years into an unprecedented quantitative-easing program, with no end in sight. Can you make a case for either more quantitative easing, or for tapering? Mr. Veru: The same or more quantitative easing is Washington's way to make fools out of themselves again in the upcoming budget negotiations. The partisan rancor remains the same. The [Federal Reserve] was rather prescient by leaving it alone, by not tapering in September. To be clear, if Washington screws it up early next year, quantitative easing will remain the same or perhaps accelerate. If we sail through this next round of political budget negotiations relatively unscathed, and that dovetails with an improved economic outlook, they might start tapering. I believe the economy is getting better, despite the missteps by Washington and not because of what Washington is doing. The economy would accelerate faster if companies had more confidence. I do think the upcoming budget negotiations will go much better, because neither side looked good in the latest negotiations. InvestmentNews: How will the financial markets approach the next Washington budget battle, which is slated for early February? Mr. Veru: Every one of these political fights has been a buying opportunity, and each one has less and less of a market impact. I think the upcoming negotiations will have very little impact. It's been a bad trade if you reacted to it every time. InvestmentNews: Are there any hidden opportunities in the market? Mr. Veru: I think energy is mostly overlooked. Some of the domestic energy plays look very attractive to us. Bill Barrett Corp. (BBG), for example, is a company that gets valued as a gas play, but what's not widely talked about is the company's oil holdings. In the bigger picture, along those lines, we've got a lot of energy in this country. We could be energy independent. That changes a lot of things. All those alternative energies will come over time, but while we're doing that, we could be exporting energy products to the rest of the world or at least not importing energy from people who hate us.

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