Patricia Perez-Coutts, lead manager of the $314-million Westwood Emerging Markets, says she's doing more company research than ever. She joined Westwood International Advisors Inc. a year ago in a controversial move from AGF Investments Inc., where she achieved star-manager status.
With a team of eight at the end of August, including six former AGF colleagues, "we are better able now to dedicate ourselves to research," says Perez-Coutts. "I'm always an analyst at heart, and about 90% of my time now is allocated to research -- a lot greater than before."
Westwood Emerging Markets (formerly Omega Emerging Markets) and two other retail funds that the Perez-Coutts team manages as third-party sub-advisors are part of the National Bank family of funds. Before joining Westwood, Perez-Coutts won multiple awards for AGF Emerging Markets at the annual Morningstar Canadian Investment Awards.
The departure from AGF was acrimonious. Perez-Coutts is among the parties named in a lawsuit launched in August 2012 against her current employer by AGF. The lawsuit remains unresolved and is now in the discovery stage.
Perez-Coutts is a senior vice-president and portfolio manager at Westwood International Advisors, the Toronto-based subsidiary of Westwood Holdings Group Inc. WHG. She took over managing National Bank's emerging-markets fund in August 2012, replacing Edinburgh-based Baillie Gifford Overseas Ltd.
Two other funds were launched last year for the Perez-Coutts team to manage: Westwood Global Dividend, led by Thomas Pinto Basto, a vice-president and former AGF colleague, and Westwood Global Equity, co-managed by Perez-Coutts.
Employing a growth-at-a-reasonable-price (GARP) approach with a value bias, Perez-Coutts selects stocks for Westwood Emerging Markets from a global universe of 27 countries and more than 5,000 securities. Initial screens narrow that number to approximately 300 to 400 companies with market capitalizations of more than US$500 million and a daily average trading value of more than US$3.5 million. Further sector-specific screens and fundamental analysis leave the fund with 70 to 90 holdings.
Westwood Emerging Markets is well diversified. No individual holding exceeds 6% of the overall portfolio, and the maximum country weight is 20%. As of June 30, about half of the fund's assets were invested in Asian markets and another 20% in Latin America. Perez-Coutts's strategy is to stay fully invested, so the fund's cash reserve is generally less than 5%.
 |
|
 |
|
| Patricia Perez-Coutts | |
|
|
|
|
|
All 10 of the major sectors are represented in Westwood Emerging Markets. "We always like to diversify," says Perez-Coutts. "It's just a good, old-fashioned, Mother Goose approach. I honestly would never err on the side of risk." The manager, whose stock-picking universe includes some of the world's least liquid markets, considers trading liquidity to be an essential element of risk management.
The Perez-Coutts team's analysis of potential holdings that pass their initial screens includes short-term and long-term views for opportunities, weaknesses and threats. The team looks at shareholder structure and governance, even noting the attendance records of every member of the board of directors. Of the companies selected for the fund, a good 40% of their board members are independent directors and "that's a tall order against other companies for corporate governance," Perez-Coutts says.
For her, characteristics of a sound business include management aligned with an economic value added (EVA) philosophy, above-average cash-flow generation, earnings growth, sustainability and growth of dividends, and a strong business franchise. Portfolio turnover tends to be modest. Perez-Coutts expects her turnover to be, on average, less than 20% annually.
Part of Perez-Coutts's investment philosophy is to be co-invested with the fund investors she and her colleagues serve. Every member of the team has personal holdings in the Westwood mandates, including emerging markets, and are all shareholders of Westwood Holdings Group, the Dallas-based parent company. "I have skin in the game big time," she says.
Born and raised in Peru, Perez-Coutts, 48, graduated with an Honours BA in economics from Pontificia Universidad Catolica del Peru in 1986. After graduation, she began her career as an intern and then economist for Peru's Institute of Foreign Trade.
Encouraged by her mother to pursue further education, leave behind the political unrest in Peru and see the world, Perez-Coutts emigrated to Canada in 1987. In 1990, she obtained a BA in mathematics for commerce from York University in Toronto.
After graduating from York, Perez-Coutts joined First Mercantile Corp., advancing to vice-president of research. Then, pursuing her passion for company analysis, she moved to the then named Trimark Investment Management Inc. as a Latin American specialist and associate manager, co-managing a fund called Trimark Americas.
Perez-Coutts received her chartered financial analyst designation in 2001, the year she moved to AGF, where she stayed until May 2012 as a senior vice-president and portfolio manager. Since joining Westwood, she has attracted $1.5 billion in assets under management, and her team is now responsible for managing a total of about $2 billion.
In positioning Westwood Emerging Markets, Perez-Coutts looks beyond market volatility and the fear that it engenders among investors. "If businesses are good from the perspective of management on a long-term basis," she says, there's absolutely nothing to prevent them from providing good returns over the long run.
