Adams Diversified Equity Fund (ADX) 27 Jan 212020 Q4 Earnings call transcript

Good day, and welcome to the Adams Diversified Equity Fund Annual Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Lyn Walther, Director of Shareholder Communications. ahead. go Please

Chief with thank Counsel. discuss and for joining today Janis the us With Chief Hook, Good Officer; conference events statements within the U.S. of the contains Financial results which reflect management's you performance for past call fund meaning we and over statements Fund's Stoeckle, Mark future the of today our Fund are are Officer; Adams as XX Brian the considered me future respect current our financial fund's General months views Act. afternoon Kerns, performance. are for Executive and This not Diversified forward-looking These XXXX. Equity to our statements the Securities guarantees and

materially are reasonable believes today investment returns to what to forward-looking that call be Mark important subject to are performance, statements turn different assumptions, the statements uncertainties cause for based We over we or are project. I and now risks, statements. remarks. other or his correct decisions could these factors Stoeckle made management revise, no will what on obligation to actual from assume update these our Although

the what for questions. never I'm remarks Lyn, and your one that we to Thanks, XXXX thanks details our we will XXXX. some Brian of on Hook us we then year will forget. some Well, going performance, and then for everybody was, and as today, discuss to Great. provide brief take results Today, joining a some certainly will provide

reached the went which in their news the very both continued and lockdown. a acted unemployment and the pandemic, Reserve by of in $X.X and not The provide great a the depression. pretty spreading of vaccine March quantities Federal a by that about COVID-XX as beginning to mid-March. from pretty market The S&P rose unprecedented result combined seen into world a the cuts XX% as XX.X% liquidity quickly, In January. the of highs market stocks, the in And new led stop the around XX% look the of December. on virus, Promising XXXX spread of rate actions, a the Unfortunately, and on package, ended series rebound levels year, since the stimulus ultimately optimistic As These to hopes rally large I a of it making the drove fell world with were the back stock over up market. way, stimulus on historic the S&P lows. to year. leading front began second trillion government for ended to debt to the November to purchasing investors

outperformance real Our contributors The our discretionary, fund rose and exceeding peer points. to percentage from group industrial consumer largest sectors. estate just two XX.X%, by our came

rollout low. and As into optimistic, the the to stock reasons number XXXX. expect interest The plan to the should see we move XXXX, stimulus market new be of package, impact the to billion although there relative gains a vaccine to $XXX of keep economy moderate begin are rates to Fed's we

see provide dependent hindered we year, risks sector activity the the which cases, some slower-than-expected by picking on restrictions We briskly businesses. in could However, are economy on lead to but opposed more of the to could XXXX expanding performance. The I'll turn stock mindful related rollout to also of performance With to expect strength. Brian to on be resurgence it to in vaccine. the further COVID-XX details economic over as the second half our of be broad-based that, a

Good everyone. afternoon, Mark. Thanks

funds our to Let's turn performance.

XXXX. average the compares to S&P is total distribution that $X.XX with XXX and and XX, Q&A like first was funds rate return XXXX; now for dividends value the capital investment XX.X% cap large for payable same shareholders fund commitment. in payment XX.X%. total declared $X.XX asset of XX.X% in toward shares this share, January distribution gain, our return core to gains For of X% of return XXXX, reinvested remind The was may exceeding shareholders begin participate? a on annual XX.X%. the minimum of for call. This XXXX, the per would the market and The you a net our $X.XX XX, represents they the record on and realized our net our capital realized total the February distributed This net please price return year, commitment. income the time The the total the period. Lipper portion in to fund X% would of listeners On to of We XXXX income over year, X.X% in consisting the fund's investment of an $X.XX XXXX. long-term Operator, both XX the distribution fund's period February how ADX was

now will Instructions] question-and-answer begin we Certainly, session. the [Operator

Okay.

question First reflecting year. the on is

Looking back most? the what you on this surprised year,

good Well, question. that's a

past because get more to natural something the disaster we past of of to us And about started is on listeners But this the And resilience the that don't market going to with things them that quickly. eventually, up hurricanes call, viewing lot happening as back. the wake. but investors think with opposed And market I more I hard fundamentally it was how was do and get passed surprised and the a its pretty late it that think the lot think it -- economy. viewing out a in broken floods but figure ended which we a know I get this of I gave the things. There's damage end, the came with we what what pandemic, those past like that March, those kinds when get and is was confidence which most -- came in back. resilience

I natural disaster something of a of to it do opposed with the was that thinking wrong terribly the as I think which of think led that So more the economy. by market, resilience was

Okay.

you of response can Following to that, talk fund to along made the that the you about in changes pandemic? the some

tell Sure. when on into like everybody could among communication remotely, were we much to else important among take and working we as team, might and to And you was I everybody we're terribly the imagine, knee-deep trying out get us, the as you, was. this, focus fundamentals. as motion -- a to we really will

and go earnings continuing take through we the a balance sheets a Restaurants, addition Goods, there those. to we to just companies a opportunistically, income in positions the some opportunity were reasonable. chance had outside Sporting of In -- in we towards all beyond DICK'S was that spite those, place thought companies, careful the that pandemic. the the and generate And was stocks hit of But of hit. which really Sonoma statements in couple bought and had were growth of we we opportunistic companies trade, gotten we went And that, and unnecessarily had we those believe, took doing revenue eye thought to did like to work Williams and in what natural strongest like trying of well it Darden a thought best disaster

what of really we this. that's ended doing So, the at up beginning

that strongest the earlier the performer. to discretionary stocks consumer What most? fund's relative returns contributed was You mentioned the

up were really discretionary I of stocks XX%; already us in XX%. doing Chipotle, at keys up -- there discretionary. Target we in We had did exceptionally up, Chipotle, have up One least was, handful in Target, already had consumer Well, we because And well. think had fortunate we of that to two was in Amazon well XX%. all XX%; positions Amazon. positions were which a were and

of also And all well that part in In addition, e-commerce well is of to a had stay-at-home the pandemic. a Lowe's way that in position very own each advantage in the in of we place able a reason did be us, for money had because of had and during take -- amount them to which performed infrastructure environment. Lowe's really their for significant invested

the so really names were that benefit And us. those

think the pandemic, fortunately other stores a did there opposed retailers and and to to some -- didn't In we retailers as some close. the to mall-based department Dollar reason, Generals and of the of that the opportunity we Even world and forced more were the good Target and that addition to and that, not own lot Amazon just the for was we prior Lowe's of of in thought we there was others.

time right the So, for pandemic own many to a and the during because names our of -- before pandemic had -- had of were that we invested close not in did names really the did quite that close and that pandemic. had in to were off work the because of pay some the did we infrastructure, lot the

that to the relative the Real also talk estate what in Can investments well drove performance about performed Okay. benchmark. you sector?

Sure.

that a is think sets good how good invest competition really question our is, it's the because I approach its to Diversified -- one we things we a I this from Equity apart way think benchmark. relative Fund the Adams' of

been think don't ignore with is as They to is the means of little of maybe we it. significant should And long we the in can I bother elsewhere. the be they real rather S&P Our would And it it. XXX. in number they I XXX. that X%. same the believers sector just a REIT X% sector, is us know a have because sector, S&P the investment spend It's in sector-neutral. I that than benchmark weighting fund less sector-neutral S&P about be time the our given the XXX. that -- say a -- funds even should estate only

In we I with commercial non-REIT And for REITs. think can I is among Things XXX believe to the different sector to e-commerce, we the real try it e-commerce therefore, as logistics large in REITs. to I he up call think center all REIT. selecting a stocks Equinix, on in that's we had be I I estate apartment when happening good real work. to I really relates equal tech And from in analyst, mean, and data other business, think again, wonderful for data space need very approach is of S&P And were Prologis, what outperform. said, Scholar, REIT, because be some we you the positioned that us our from the addresses We is, centers. REIT, another relative non-REIT Microsoft companies estate had at as like to sector a ended said, of fortunate see is in weight in, the As stocks. REIT as for demand. are and pandemic year which of that our were go will which I a one, would a what of the Jeff that. we mean continue logistics that

value significant call add So, a sector, really we and again, us. for were able REIT significantly paid what outperform the on, non-REIT I concentrating very to that for small sector really off

about that called that The in performance the Can was you other sector talk what out you sector? drove industrials.

since one, and which fortunate sort United it Industrials -- One increased we to equipment. we're you in an to you success It the estate, a is side I coming United us Sure. large imagine. position stayed And will in added of might of what fund. XXX% discretionary might more And Rentals, the what what in have we is -- It about other as and interesting exactly Rentals. does sides really we the standout. out what side it to does industrials. from. two really, talk about was And owned of cyclical it or some resulted have wanting is rents is, I'll we pandemic. exposure the were -- unlike real the a away owned we

They And for lot name Hannifin. they in Another Kansas at we analyst, time, thought and and Swindell, City, done our well that helped a the us again, in Southern was it well. positions cyclical issue prior big we had it the Cotton identified you, and not a the of above-peer a we our to we the those growth, And years, owned don't the Boeing largest we in to helped Parker stocks sense We that have one third think really with and XXX-MAX well were Boeing, where Boeing. own. were should that made was from certainly two exposure is think it fortunate sometimes coin, control we transportation, it a I of upside make we last help that will of was name volume year, cyclicals. a on margins. one it. the systems, we lot continues that that beneficiary did liked have had railroads. expected knows side industrials He tell motion and And fund, sold you you hit long of here. and exceptionally after was The of the other one year. from stock benefit which

which out thing XXXX, I tell in sold decline. be to you, we turned will Boeing continued it know So, we good a to very very because well.

We we still don't kind will We some to it XXXX, to it. ways they think a big that a enjoyed little free they to now, we were own flow cash have for the at point. when own it XXXX likely in but back yet throwing get go off ride of

So as sides tale industrials. two relates of it to

had what strong benchmark, did worked what and investments fund another though. this sector not The technology talk The about lag year. interesting. you the work did year? That's Could

of were do the in, Microsoft, we very the card about up after analyst, tech about Visa our in Chang, done of the a weight did stocks good Yang we were in is technology nicely. because We travel, quite it did we in Shu is time of that was we've trimming pandemic some a over lot in XX%. it and that some really they still had and quite for the concerned Visa We've -- the they still during had did end cross-border -- followed well has years. shortly job. the MasterCard Where business in credit and areas the is money both the of very was MasterCard. a We drives chin up during made we jams which take that them. XX%; hindsight, MasterCard worked up all because and two time, for had began some Those big them owned biggest and wish do. really sold -- the own what on What some of did one the year. it we not In was Adobe, I Visa which do of lot year, Sure.

when We but that travel that first, the see cross-border portfolio we our one annual business out. over You'll report cross-border mostly comes travel, back, certainly come in those time, still was underperformed. believe will where area travel,

did And we in you The We was S&P where for if area have semi. not other there, and underperformed had XX%. year you Fine and or tell NVIDIA investor keeping have exposure a up XXX. I AMD with to would own elsewhere. a was underweight up had the XXX% you are up do are relative semiconductors. we we will NVIDIA investments but AMD, hard the time semi was you, companies,

not two, So, the combination not of with being a little underweight for semis and did being performance not owning NVIDIA, certainly year. our detract those really the technology AMD owning from over in

a the being you Visa such our Okay. credit MasterCard. cards spoke will Or solutions in the alternative -- always up on on as think take you do payment? credit card what investments as method see We and on about question received do lead? a of think PayPal just primary you Do you following

get business would and this MasterCard continue. represented durable believe the and that good being past like fewer we horizon that to by models a as we over think see in and registered, pandemic, see begin that will to once We still closer we get coming I We with the will the that's able Well, to being question. believe and Visa some that vaccines MasterCard cases Visa. to

reality. credit a as traditional we're we is wholesale it. very do being believe supplant move to PayPal, We that the for as of place away many from little wholesale a a there's just a place think a that using anyway, I relates not model the But it to itself. cards. so a it think for years think there will that business PayPal, it good we to relates a has today bit PayPal. do do I PayPal own

everyone Okay. Paul, can you ask remind how to the question?

Certainly. Instructions] [Operator

Okay.

this question IPO market in any Our was IPOs? how the any relates next Did participate of and to it strong -- Adams year.

did prior IPOs. work The was is a not. did all life, able you that We had I did staff to we do not. in answer my you, tell do to short that. need will And big the we we

in But that and can staff to abundance the the go if coming here. way market. interesting other prior really an to be you think be evaluate that's in investing it IPOs to staff of public. don't of We able the an I have have IPO

We have everything we need.

and at taking idea the so right that not IPO on think in resource of And a and being an our that, looking favor. we risk/reward is the

So, to we not that. chose -- we've chosen do

meaningful to IPOs hard position a an that's like practical other The is, are. about we when thing in IPO get in $X.X part a you're really billion only assets it's

wanted. that out think all an get all XXX,XXX from from for in then much. and away is you what And it you, that shares and you'll of get time, value, pops runs and IPO away you've you that the put and you'll fair shares So, didn't effort, spent IPO runs day, XX,XXX you very

So, we to think shareholders time it's than IPOs. places of other our use a represent better our doing in

Okay.

think received do you take questions. want those? of Mark, I a to we couple other

Sure.

is actually them volatility in there question, almost a bifurcated seen, of I the it's in today. here we've would given too much way. that current especially good I optimism look is, the market at market? One the a think

that big that doing should is continue well. well is the part think to I of do a and there market

I early pretty things think that the of well actually is we do that stock One stimulus. We've that got mentioned this market the year. should

a We accommodated have -- very Fed. we've got

were COVID on group equities. to consider able couple draw But will be good a of are in -- horizon picture. you good, We've last last those go Fed, We people a to have being There above-trend with use was years indication, sidelines. were an to I They continue markets EPS There for all well. accommodative out you still It They a with people did those about quarter. and the when lot exceeded I And kind to expectations. cloud very mean good. to over underrepresented of we concerned very put things be a also by were lot reported Azure, your teams over growth Collaboration things up pretty Microsoft every cloud. the attention be with continue. of year, use margin together, what a Microsoft that equities. it's very expectations. of gaming to see they The revenue day. night. And probably to they what favor, are every continued have we that flows of every very, That report. coupled is They great. GDP was the day, like and great expect a continue will in end that this people the see things a expectations. business exceeded like And something exceeded of thing lot addressing

are detail that they and think we that quarter think gave last that is they the really there. we that sweet enough So on guidance in spot, there forward We that promise there's end. of enough looking lot guidance quarter, a enough don't -- the think this the --

area. speculative in I -- that the -- energy is sort of with is bifurcation, days happened small is alternative think looking I some an traditional area several there stocks, Then area you what's of there stocks, last the happening the about there's when what's at the talk start start GameStop. looking So of an at you overheated. some When

are that market, I really of I think are electric pockets do As overheated. it said, there the vehicle

they've that I they're that therefore, that doesn't had a better think would beyond those interested mean it their means wait run-ups -- areas, for way, the go by you're would in Now fundamentals. What at And alternative. companies is bad I I if necessarily all.

two I tale that do and I a that. that's it's think would So, describe way really of the markets,

Communications what done a minute the ADX to things. and is Lyn here, -- to over the jobs really community. I'm take of about in But in have Lyn. those. one we've is that like the I'd Lyn addition do what to Baltimore to spearheads question surprise is going give to doing back several to We to turn Shareholder the to And I'm going her community? of And being a to there's another -- we Director talk is, -- because she

group Thanks our to together two community. give as group work that that Mark. feeding helps organization give to we to is At do have them, We've We also And as to which at Baltimore ways. have back give a back Place, in continue one different by we individually Kitchen. try that. in all Soup gotten clothing we done homeless we Paul like try them, people City, days back things work Adams, a and to

Some people to Baltimore out. Zoo help the go and

different their to to and go do charities people part. Some local try

in bit we the really not time, forward and that. doing So, and is to the all look challenging we we to Hopkins fund restrictions, a the obviously, with group, because, just getting but passionate were obviously, this and early we participation. given more -- pandemic, contributed getting a year And COVID vaccine a a was little at Johns we, our that about as General back Mass as but group to had pleased And on finding everybody normal. XXX% to back also

employees' The two match charities. -- make away we from they our just work of one contributions maybe days to workday a And in response clarification. would days volunteer. to use that -- to can up work that their so about, to COVID the everybody $X,XXX that also addition talked for Lyn gets two -- I

but do try looking to to was do So out, get because of do very -- able we're but were those and was to more little forward -- XXXX on this being a kinds we able was frustrating getting monetary it out Lyn's we a physically things. back basis, it right, to bit hard year to

forward? And And well think decisions? Another question performed value your obviously, stocks influenced has growth stocks. around we how this for they growth do really How have many investment years. versus about going you revolves

recently. -- stock do of one is math head there look year So, value have off stocks time, generally value value the We up considered or usually their look beaten And for the months are mentioned I be end growth be And but the up. a value two we long up bucket, in are financials will likely at aware, energy stocks we're that of everybody stocks. and as of are investing considered as sort considered each -- quite sector-neutral. a would just stocks lift bucket. we those in in would because, value Value earlier,

-- reasonable some have. I have but a to Not value, what -- fire growth, alternatives type we at value. would mean Fund not we of of Adams are always a lookout have we I do we're but always growth a consider Diversified on price manager. blend we So better look But the growth we at Heron but to be and deep growth, sort Garthy for some looking price. for the right reasonable Equity

So I but But value. rally likely. it, we bit could is happening. it's real are starts think lookout on deep the fits among a We a like of I right not -- chance don't we're it in have skewed value now, value than a toward move deep chances value. with to and the stocks. market is for I But the for little opposed to a look those. us owning not of more toward mean we're the landscape And growth terribly

think XXXX, ahead, then sectors do this And looking you Okay. best positioned? what year, are

And that the stock a Companies is some think of have to do Amazon, an of I look I will think good opening stocks. this we will -- that poised part we horizon, sectors I over to will good we to all have it's last when but we think reopening I today, we kids. year. that will a the to continue of could do own. you them. the is that, consumer our we Certainly, or will give your another. In And I'll smart it's love not, names well, you I that guess continue TJX do result year. It's reopening year which discretionary Well, Hotels own which own continue well. sectors But do stocks. we do that one think be think debate, whether is because Hilton year we the tell of own that a had like I answer, portfolio to -- the

that So believe well. discretionary we consumer do should

we do We he's should own also financials more little think that maybe a than begin been I Fargo. to guess the a There, there better. year. Wells

expense it's there's CEO, the the new fruit low-lying We to new of is but address for call we which of lot poised there, to over costs operations. We least think that a him the not to a So is is impact to time. help on ledger. company -- taken that which an finally well him a getting really have what that, hard bloated having the think consider of should around margins out, really CEO lots

addition bank, about card like card They've is credit is a to consumer business we is a of One Capital One. credit Capital in In that, XX% a credit their about in and company loans. bank. got XX% cards

shape. in And and think the taken has the parts, little opportunity bit, the a down speculating One down good interesting good -- is morning, well very of Credit since we for really see and One pay debt. believe, and that One. for we this to lowest Capital bode pre-financial but crisis the consumer in is Capital is that, we're the they've consumer consumer great did paying we shape, reported are regular And and we us, that the card shape to really it, should in paying down they're credit been charge-offs card companies People that, debt is means like debt. Capital that One.

Okay.

elaborate in marketing. I And about quite the ADX a of the useful to question a bit? you other CNBC fund. in more channels would terms out you a little -- word like another presence or regarding Mark, for getting do We on feel you've current to done know, be answer questions Would have frequent bit.

will I tell you. Sure.

job with done I wonderful really Lyn think margin, on a the marketing. it has helps. our

or see Barron's frequent we We or presence me Lynn more have every on of to does LinkedIn have in is any I'm on areas that followers And time a quoted time LinkedIn. I'm get any that I other TV that able Bloomberg the can pretty think help. And into. I

XXXX doing website thing the other website. good think. that is website. is a our Lyn a of updating having things And one I We that I helps in XXXX, put our spent The together part think of really big

in I finished think it we 'XX.

had gotten a little tired. And so, it

So effort Lyn put of lot a in there.

TV making think, I visually in navigate. they live. helps good and We that that addition these I get a did things, do In to being listen out helped. to it Barron's, of of Bloomberg it being that weren't think call seen those on taped to have to making quoted hope if job We their people. easier in way, word able it can and journal this so it it all the things own really she hear people appealing, of I the kinds And think to to

a these do of -- when I Adams raising to a high-quality, are our some like cap of Equity all so that thinking that people about they Diversified So Fund. large good money profile fund job put consider things, into think, I'd

was Yes. well. Mark I on Bloomberg will And add that this TV morning as

get continuing you out for thank our thoughts. So word the Adams about to investment and

have time that any Mark, all we So today. have the is comments? do you closing

just for that very portfolio here you've I the love I to thank do. group of I we a working team I industry want us. analysts at acknowledge and the experienced Adams. given time want also have to with. managers, everybody which It's investors,

for us. results. again, earning our approach investing. really a and us. trust all take our we very for shareholders takes shareholders. incorporates We to is you do a happy focus that for in and do joining good strong rigorous thank healthy. a And and compliance. keep trust view Thanks, disciplined The I us. to hope maintaining by not intend also a it supported really We team for safe I We're granted. consistent to by And investment a investing on delivering that in with we and And do infrastructure think We things long-term want accounting we're good. team your stay appreciate

The conference attending has for presentation. you now concluded. today's Thank

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