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All clients of Linde Equity Investment Counsel receive their investment advice from Teal Linde. Understanding his investment philosophy, research methods, and perspective of the investment industry will indicate the type of advice you can expect to receive. Below is a series of questions and answers to provide insight into these areas:
Teal Linde (TL): Two thirds of our clients have a strong interest in stocks. They like to be involved in the management of their account. However, they realize they don't have the time, tools, or expertise to do the job properly. Therefore, they retain me to assist them in identifying the best possible stocks to invest in and to monitor their portfolio. I essentially serve as their personal stock analyst, searching for qualified stock ideas to bring to their attention.
The other one third of clients are those who have little interest in stocks. But they have heard about Linde Equity and like the idea of having an independent stock analyst manage their account. These clients elect to have their accounts managed on a discretionary basis, but are kept equally informed about the status and performance of their holdings through regular communication and quarterly reviews.
How do stocks in private client accounts and the Linde Equity Report differ?
TL: The Linde Equity Report and private client accounts pursue different priorities. The Linde Equity Report competes for newsletter performance rankings. Its stocks tend to be more aggressive. Private clients prioritize capital preservation and growth. As a result, their accounts are usually more conservative. Private clients will, however, own some of my favourite stocks featured in the Linde Equity Report. But their exposure is kept within the bounds of each client's risk and volatility tolerance.
Do you provide advice on Canadian stocks?
TL: Yes. The Canadian market offers some great investment opportunities, particularly in the energy and financial services sectors. These recommendations are available to private clients. Canadian stocks typically represent about 70% of private client portfolios. As for publishing Canadian stocks in a newsletter, since the Linde Equity Report was originally created to target a US subscriber base, only US listed stocks, including US listed foreign ADRs, are featured in the newsletter. There are presently no plans to change this mandate.
What kind of portfolio turnover can I expect as a private client of Linde Equity Investment Counsel? The Linde Equity Report’s turnover appears high.
TL: The Linde Equity Report is a monthly publication that feature a new stock recommendation each month. In order to keep the number of stocks the newsletter follows manageable, it needs to close out, or sell, positions at a similar rate. Thus, the turn over is high. Private client accounts, however, do not have these kind of publishing requirements. Private clients will only buy stocks on investment merit. There are no quotas involved. Once a private client account becomes fully invested, portfolio turn over is usually less than 20% per year.
How does Linde Equity Investment Counsel prioritize client communication?
TL: We continue to be surprised by the number of clients who left their previous advisor with lack of communication either being the 2nd or tied for 1st reason for leaving. While we can not control the stock market, we can control the level and quality of communication we have with each client. Therefore we have made a great effort in this regard. Furthermore, we believe that the best way to deal with severe stock market turbulence is to really understand what you own and why. This can only be achieved by personalized communication and discussion between the advisor and client. It is an investment of time that we make to prevent clients from feeling uncomfortable during sharp market sell offs, and instead to see such events as opportunities for switching into better stocks that have gone on sale.
TL: They don't consider enough investment ideas. There are over 9,000 stocks to choose from in Canada and the US. If you want to find the best stock, you literally have to consider all 9,000 choices and pick the best one. Fortunately, very powerful online stock screens are available which can allow you to screen over 9,000 stocks, come up with a short list of about 300 which you can then whittle down to your favourite 2 or 3 selections. As Peter Lynch put it: "The person who turns over the most stones wins!"
TL: It is easy to recognize a great stock, but not as easy to find one. One can learn to recognize a great stock by studying the books of Peter Lynch and Warren Buffett. In those books you can acquire the criteria which often identify great stocks. Then you take those criteria and start matching them up with the thousands of stocks that are out there. When you’ve found a perfect match, or close to a perfect match, you’ve probably found yourself a winner. Acquiring the criteria is the easy part. Where investors often fail is in not spending enough time searching for the best match. Too often they settle for a stock that Buffett or Lynch would not be interested in. Again, the person who puts in the most time will likely find better matches and achieve better returns. Thus, for my clients, I spend the majority of my time researching Canadian, US, and foreign ADR stocks. Research is the number one priority at Linde Equity.
TL: The smaller size of my client base creates a tactical advantage for achieving superior returns. With over 9,000 stocks in the US and Canada to choose from, large money managers and most mutual funds tend to invest their clients' money predominantly in large cap stocks, due to their high liquidity needs. Unfortunately, these large caps represent less than 20% of all available stocks. Thus, many investment opportunities in the small and, to a lesser extent, mid cap categories, which collectively represent the other 80% of stocks, are overlooked. This presents a serious opportunity loss for a lot of investors since the fastest growing companies and best performing stocks are usually found in the small to mid cap category. At Linde Equity, we can select form the entire stock universe, expect for penny stocks, in ways that allow us to cherry pick the best investments for our clients from all asset classes.
TL: The best thing for us to do is meet. I will explain in greater detail my investment approach, strategies, research methods and market outlook. I will also perform an analysis of each of your current portfolio holdings, telling you which ones you should keep, which ones you should consider selling, and explaining why in each case - all in the context of your individual investment objectives. This face to face process will demonstrate to you how I do my analysis and arrive at my conclusions. I will also provide you with new investment ideas as examples of the type of advice you can expect to receive from me in future. If you are interested in setting up a meeting or have any questions, please call me at 604-738-5600.
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