WONG: I'm Graham Wong, senior portfolio manager at Thrivent Asset Management. I'm a CFA charter holder. I have my master's degree in applied economics. I've been in the industry for 24 years, all on the buy side, all in value investing. Um, why do I love this job? I love this job because I'm highly competitive and I enjoy the daily grind of investing.

GRIFFITH: I'm Nick Griffith. I'm also a portfolio manager at Thrivent Asset Management. I'm a CFA charter holder with both MD and MBA degrees. And yes, you did hear that correctly. I graduated from medical school. 

That's typically not a background, you see, uh, to put it mildly. Uh, people with MDs who also work in finance tend to be either on the sell side doing pharma or biotech or in early-stage venture capital or private equity firms. So, it is a bit different for me to have this background and be working in value investing.  

After finishing up my grad studies, I decided to turn my passion for value investing into a full-time career. 

So what gets me out of bed every day is I'm fascinated by the blend of business analysis, strategy and human psychology that has really blended into the stock market.

WONG: Nick and I manage the Thrivent Mid Cap Value ETF, ticker symbol TMVE. The strategy’s inception date was actually back in February of 2020, when it was launched as a mutual fund product. It has a strong long-term track record since that inception date. And we're excited as of November 14th, the fund has been converted to an ETF which carries lower fees for our clients.

Our investment philosophy is to rank companies based on operations, valuation and catalysts to unlock value.

Now in terms of our process—our process, we're bottom-up stock pickers. And we strive to have non consensus views and have our proprietary research, which feeds into our financial models and helps us with our valuation and analysis of companies.

And the goal of all that is to have consistent investment returns while managing risk for our clients.

GRIFFITH: Value and growth stocks are actually quite different. 

Value stocks are companies that have a demonstrated track record of stable earnings and cash flow, whereas growth stocks tend to trade on expectations of what those numbers will be in the future. We find it easier to buy companies below their intrinsic value. Then we're looking at profit streams that have largely been realized and don't need to grow a ton to support the valuation of that company.



WONG: We really like the mid-cap universe. I think a lot of investors don't realize that market leaders are not all in the large-caps. We have a lot of mid-caps that are industry leaders. So, for example, D.R. Horton is the largest homebuilder in the country, Simon Property Group is the largest mall operator and Sysco is the largest food distributor. And because these companies are still mid-caps, they tend to have more room to grow compared to large-caps.

Now, relative to small-caps, we also take less risk, which we like. Small-caps tend to have more debt on their balance sheet. They have higher financing costs, whereas mid-caps tend to be more established, so, they generate more stable and predictable cash flows, which is something we really like.

We really like it when the Main Street economy is healthy. And the reason is when, when the economy is healthy, uh, the market tends to broaden out, and many sectors tend to do well. We also like it when value sectors do well. And these sectors are REITs, financials and materials, which are more cyclical and more dependent on the economy.

Lastly we're bottom-up stock pickers. So, we really like it when stocks are driven by bottom-up fundamentals, rather than top-down headline news.

GRIFFITH: Active and passive management is actually quite different. So, TMVE is an actively managed strategy. Our goal is to pick the best 60 to 80 companies in our universe, and we like to put 40% of our assets into our top 20 ideas. Simplistically, we're looking for top decile opportunities while simultaneously avoiding the highest risk and the lowest quality companies, which oftentimes don't do very well.

On the other hand, passive funds own hundreds of companies, and many of these companies would not meet our inclusion criteria.

WONG: Relative to our active peers, we feel like our competitive advantages are we have a really strong and experienced research team. We have a strong suite of software tools (and some of them are internally developed.) And most importantly, we have a strong investment process.

One important differentiation of our work is our focus on industry analysis. We spent a lot of time here. We focus on competitive positioning of companies which helps us avoid value traps. Value traps are those companies that are cheap for a reason. Instead, we want to buy undervalued companies where their competitive positioning is strong or improving.

GRIFFITH: Our inclusion criteria really comprises three buckets. From an operating perspective. We look for companies that have a high economic profit or those that can improve their profitability through either restructuring, self-help or some sort of industry change.

The second bucket is valuation, and we want to find companies with asymmetric risk-reward profile. So, what that kind of means in layman's terms is we have the, the, investment team put together a bear case and a base case. And we like to see the upside in the base case be about three times the downside in our reasonable bear case.

And the third bucket is, we are bottom-up stock pickers. That means we look for companies that can control their own destiny. And we really like it when companies can find some sort of operational improvement, regardless of the macroeconomic backdrop.