Ryan Leggio: Since you invest in all different types of sectors in the U.S. economy, are there particular areas of undervaluation, or do you think there's opportunities in all the sectors?
Govil: The market, Ryan, has come up quite a bit in the last few months. Since March there's been quite a rise. And the values to some extent, have dissipated. You don't find as many companies that are attractively valued now. But we are still able to find good companies in pretty much every sector. You name the sector, and we have companies that we have on our so-called "farm team," which we are working on actively, that could be suitable additions to the portfolio.
Leggio: Speaking of your farm team, we've heard a lot of managers talk about the divergence in valuations between high-quality or wide-moat stocks, and lower-quality, lower-moat stocks that have really seen a run up since the March bottoms. Are you also finding that these higher-quality companies with good competitive advantages look cheaper to you than the others, and are those making up a big portion of your farm team?
Govil: It's quite true that if you were to define quality in terms of S&P rankings, companies that have a ranking of below triple B rather than had a ranking of double A, single A. Those lower-ranked companies have done well but you have to remember, those are also the companies that got hit much harder, and this generally happens when a company gets hit harder, it commensarently comes up if you were to only take the bottom as the starting point.
If you look at it over the complete thing, the picture may look a little different now. Coming to the real question, which is: Where are values today? We are again finding values everywhere but given that we are particularly focused on companies with a competitive advantage, definitely we are seeing some better values there relative to the companies that don't have a competitive advantage. There these stock prices have risen up too much and that margin of safety has dissipated.
Leggio: Well great. Thanks, Mani, for joining us today.
Govil: Ryan, thanks for having me. I appreciate it.