Greg Carlson: Another area you've been interested in lately is consumer-oriented stocks, what some label consumer discretionary. Can you talk a little bit more about that? I think that's interesting, because a lot of people have fairly morose, if you will, predictions for consumer spending in the near future.
Andrew Stephens: Consumer spending aside, and that is a big part of the equation, but it's not the entire picture. The way we think about it, what's really interesting is for years we were underweight the consumer thinking that the consumer was spent up and the enterprise was pent up.
Then we went into the credit crisis, and really, the first companies in were the consumer discretionary companies. They were the most overbuilt and probably the weakest true business models, and quite honestly, we became over-stored in the U.S.
And yet if you fast forward to today, we've seen a lot of the weaker businesses go away. We've seen the likes of Circuit City and others that have just gone bankrupt and been liquidated. That's reduced a lot of supply, and it's happened across a lot of different categories, Linens 'N Things and Home Goods. So the stronger competitors now have a more open field.
The better business managers have reduced their square footage growth from very high numbers down to very manageable numbers. They've learned how to manage their inventory better so they're selling through more and more of the goods that they bring in at closer to full price. They've added e-commerce initiatives to their businesses. We see the flow of goods through those models as being optimized and the margin structure looking better.
The majority of discretionary spending by the consumer is driven by the top quintile of wealth, and they're very affected by the stock market. So as long as the stock market is recovering that spending is going to come back, and we think as it does the better positioned companies will have much higher margins. We're somewhat enthused by that trend.