Brian Barish is known for his ability to talk in depth about the stocks in his portfolios, often strictly from memory. Unlike many portfolio managers, he does much of his own research.
“There are only a handful of truly passionate portfolio managers, and he is one of them,” said Greg Brown, an analyst with Morningstar Inc. “Every time I interview him, the calls always go over [our allotted time].”
One would have to be passionate to manage a large-value fund such as Cambiar Aggressive Value Investor Ticker:(CAMAX). The concentrated fund owns 18 to 23 stocks at a time, has a turnover ratio of over 200% and historically has been heavily weighted in energy stocks — a particularly volatile sector over the past couple of years.
Mr. Barish believes that keeping concentrated is what drives the fund's returns. “There is plenty of academic research that shows that the more focused managers tend to outperform the more diversified managers,” he said. “It's human psychology. There are fewer eggs in the basket, and you watch it more closely and make better decisions.”
And despite the swings in the energy sector, Mr. Barish's investment process appears to be working. The five-star fund has ranked at the top of its category for the past one and three years.
Mr. Barish, 43, whose father founded Cambiar Investors LLC — “cambiar” means “to change” in Spanish — attributes his success to the challenges he faced when he started his career as an emerging-markets analyst for Arnhold & S. Bleichroeder Advisers LLC, a research firm.
Initially, many of the companies that Mr. Barish covered were in Latin America, but he didn't speak Spanish. To make up for this shortcoming, Mr. Barish buried himself in the financials of the stocks he covered — which were vast.
“You were forced to outlearn because there were a lot of different industries being covered and you had to be able to discuss all of them,” he said. “I was a generalist by definition.”
During the early years of his career at Arnhold, Bear Stearns & Co. Inc. and Lazard Frères & Co., Mr. Barish gained experience covering an array of sectors, including consumer staples and financials.
“I knew I wanted to be a portfolio manager someday and I realized that you can't be a portfolio manager of a diversified strategy unless you understand banks well,” he said.
As a portfolio manager at Cambiar, Mr. Barish is enamored of energy stocks. Even during the BP PLC oil spill last year, he kept his heavy weighting in energy, which makes up 38% of his portfolio.
Having covered emerging markets has helped Mr. Barish understand that energy is a “fundamentally core part of a portfolio,” he said.
“We don't believe that we won't be able to produce enough oil, but we are seeing signs that incremental production of oil is difficult,” Mr. Barish said.
Identifying those energy companies that are in a good position to produce and grow is key, he said.
One stock he likes is Repsol YPF SA Ticker:(REPYY.PK), a Madrid-based utility company. “We think they can grow at a 3% to 5% rate,” he said.
Hess Corp. Ticker:(HES) is another energy company that Mr. Barish owns. “I believe it can grow 4% to 6%,” he said.
Mr. Barish compares examining the energy sector to playing chess. If oil prices are up, it affects an array of other industries, such as aerospace and automobiles.
“It's a constant asking yourself, "How do you see these different things playing together over many years?'” he said.
E-mail Jessica Toonkel at [email protected].
