Blueprint Capital Management was started by Neil Cataldi and Jason Revland, who share over 30 years of combined market experience. Neil has 14+ years of relevant Wall Street industry experience across equities, options, alternatives, and Family Office wealth management. He began his career on the floor of the Philadelphia Stock Exchange where he worked for both TFM Investment Group and Goldman Sachs. He then worked as a derivatives strategist (on the same team as Jason) at Susquehanna International Group, generating stock and option trading ideas, mainly within the Consumer sector. Just prior to Blueprint, Neil worked for a private Family Office, whose assets under management exceeded $250 million. Neil managed a range of investments for the family, including actively managed equity and fixed income portfolios, as well as the oversight and management of a large portfolio of hedge funds. In this Wall Street View, our host spoke with Neil Cataldi, Portfolio Manager of Blueprint Capital Management at the LD Micro "Main Event" 2014 in Bel Air, CA.
Mr. Cataldi begins by discussing what's been going on in MicroCaps with a 2014 recap, “I think 2014 has been a little challenging for a lot of managers, 2013 was an exceptional year. We like to think that our benchmark is the Russell 2000, there’s other smaller indices that we could look at but the Russell had a great year in 2013. You know, we saw a lot of take-outs, we saw a lot of companies double and triple. 2014, small caps underperformed large caps and you know I think as a result of that it’s been much more of a stock-picking environment. So a lot of managers we know underperformed a little bit and it’s been a little more challenging but ultimately this is an uncorrelated, you know, area of equities right. That’s why people should invest in this space.”
He explains why he likes to focus on consumer goods and technology markets, “So our focus is on consumer and technology. A lot of sectors in the market right, we can talk about energy, we could talk about biotech and pharma, we talk about the financials. In our opinion there’s a lot of variables in the space, spaces that we can’t control. So with biotech, I don’t really want to, you know, I don’t have an opinion on a FDA panel meeting, in the energy space you see what happened with commodity prices recently, it’s just something I don’t want to try and predict, right. In the consumer and technology spaces, I feel like I can get my hands around the business model better so for us, that’s where our focus is. In terms of portfolio construction, we like a concentrated portfolio, we think that when you find a great company you want to capitalize on that opportunity right. So for us 10-15 names over portfolio gives us the concentration we’re comfortable with but you know as far as sizing I mean we typically start out between like 5 and 10 percent of the portfolio, as a management team executes, we feel more comfortable you know increasing the allocations and it’s something you have to manage daily.”
He discusses how Blueprint allocates their portfolio, “Whenever we buy something we have a thesis, so we’re long-term investors. Typically the risk-reward profile of these companies is asymmetric. So we’ll think that if we’re wrong downside might be 25-50%, but if we’re right it could be 3-,4-, 500 percent and that’s what we’re really looking for because if we put, you know, ten to fifteen of those in a portfolio and our homeruns are 3-,4-, 500 percent we can limit the downside with the losers.”
He concludes by going into what investors are keeping an eye on in 2015, “I think it’s going to be a stock pickers market again, you know I mean the markets had a great, you know few years. We’re watching two things watching, we’re watching interest rates. You know as interest rates start to move higher again it’s inevitable, I mean people were calling for this a year ago right, there’s no telling when it’s going to happen but when rates start going the other way, there’s going to be a natural outflow from equities into fixed-income. Now that shouldn’t really affect microcaps too much but it’s a headline to keep an eye on. So interest rates and more recently we’re keeping a close eye on commodity prices because I think that energy prices and oil prices more specifically, you know we’re going to get to a point where it’s very favorable for the consumer, but maybe it’s not so favorable for the energy complex.” For more information, check out their website: www.BluePrintCM.com
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