Interview with Patty Edwards - Zing Talk

Hello and welcome to Zing Talk.

Today our guest is Patty Edwards, founder of Storehouse Partners, LLC which is now known as Trutina Financial. She is also a contributor on CNBC's Fast Money.

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Could you tell us a little bit about yourself?

I am an investment manager. We manage investments for individual clients, some institutions, but generally focusing more on that individual investor that needs individual attention with their money.

What did you do before managing money full time?

I went to school, graduated from UC San Diego with a degree in economics. I'll be honest; I spent a lot of time in the history department and jazz performance department. After that, I thought what I really wanted to do was become the editor of Newsweek or Business Week, and so I went to grad school for Journalism, ended up deciding that wasn't what I wanted to do, and directly after that went into investment management.

How long have you managed money for?

Back in 1986 there wasn't a lot of investment management outside of New York City; I got hired because I could type. Within a year I had become a licensed broker, and by 1988 I was managing money, about $150 million. Not bad for someone who had been in the business for two years!

You're primarily known as a retail expert. What is your outlook for the consumer going forward?

It's funny, I'm known as a retail analyst, but I'm really more of a generalist. I do really gravitate towards the consumer with them being 70% of GDP; you have to have your finger on the pulse of the consumer. Based on all the earnings commentary that we're getting, and the economic data, I think the consumer is in a world of hurt, and will continue to be in a world of hurt going forward. Consumers aren't a homogenous unit however; you're going to see things like the higher end companies do better because those consumers are mostly focused on what their balance sheet looks like, and anyone of the middle and lower income are just trying to survive at this point.

Do you have any particular retail stocks that you like that our listeners might want to look further into?

There's a couple, I actually bought some Tiffany's TIF for my client this morning. I also own J. Crew JCG; Mickey Drexler, who I think is one of the best merchants out in retail and is doing a phenomenal deal with their product, has come out and said flat out that the consumer has gone cold. So if you can get stock at $30 I'd be very interested in it.

Besides retail, do you have any sectors that you are particularly interested in? Why?

I'm looking for undervaluation or I'm looking for growth. I think if I had to put myself in one category I'd be looking at growth stocks that are trading at pretty reasonable values. That said, there have been times where I've picked up absolute doggy stocks that no growth investor would pick up, because I saw the hidden gem that was residing inside of them.

What is your investing style? Are you a value investor, growth investor? Do you have multiple styles for different clients or is it one style for your clients?

At the last firm I worked at I developed my growth strategy from scratch, but I've worked in value shops prior to that, and was running an equity income fund which by definition is focused on value. I've done so many styles that to me they've just become my style.

What factors go into play when deciding whether to make an investment? What metrics do you use?

I am looking at revenue growth, I think if you have revenue growth then you've got earnings growth. I sometimes buy stocks that have better earnings growth than revenue growth but it better be a good story. I'm looking at valuation for that stock, but that doesn't mean I'm only buying things cheaper than the market. Recently we've been very focused on dividend paying stocks and using them almost as a bond-replacement strategy.

What are some of the websites or sources you use to get your information when looking at potential ideas?

I've got a Bloomberg terminal I use to run my multi-factor model. The model takes the thousands of stocks into a working list of 300-400 at any given time. We then do more research on some of the names; and it's a way to get down to some decent candidates. I'm reading everything I can get my hands on, from Seeking Alpha to talking to the other people I'm on with at CNBC about what they're doing. And frankly, Twitter; there's a pretty robust community on there.

You're one of the most well liked contributors to CNBC. How did you become connected with contributing for CNBC and how has it affected your investing style, if at all?

I've been doing television for about eight years, and it was pretty localized until I made a call 5-6 years ago when everyone was in love with Wal-Mart and I said that the “emperor had no clothes,” causing the sale of Wal-mart in our shop. This caught the attention of Bloomberg for their retail, so I started doing more television with them. CNBC picked up on that. They were looking for a retail analyst to talk about something, and I got a call out of the blue. I agreed to do a spot on Fast Money that night, did the spot, and got an offer to become one of the regulars.

Tell us what it's like to be on the Fast Money set. What goes on during commercial breaks?

I'm kind of in limbo a lot of the time, since I'm out on the west coast, so it's me and the guys in the studio; but when I'm in New York… one day last April I snuck into the set partway through the show, and Pete & Jerry got up off the set during commercial break and gave me a hug. It's very congenial, and it feels like when I was a kid at the dinner table with my brothers, and it was all about who could make the smartest and wittiest comment at each other. It hasn't changed much, I'm just doing the same thing with different people.

Could you tell us some of the prep work that's involved in to working on the show?

It is a huge amount of preparation, out here on the west coast, the first call of the day is at 6 AM my time. There are multiple emails flying back and forth between us and the producers, another call at around noon, and then one final conference call about a half hour before we go on air. It's a lot of homework, but it benefits my clients.

You're a mom to a set of 10 year old twins. How does being a mom and managing your family affect your business?

Well my kids are actually 9 and 10, but family life is a huge part of it. My boys have always known me as someone who has been on television, since I've been doing it since they were so young. As far as home life, it can be a big job, but my husband is a stay at home dad, who was in the military for 20 years and retired. Since he missed a lot of the upbringing of his older children, so he's been able to be at home with these kids all along.

Finance is generally perceived to be a man's industry. Do you have any advice for our female listeners on what it takes to be successful in an industry dominated by men?

That's a tough one, since it's something I have battled all along. You have to almost be smarter and better, but you can't be bitchy about it, for lack of a better phrase. You have got to know your stuff, and you have to know it better than the guys do because they'll get a free pass on things. I'd also suggest – I know handbags, but I also know football – so I have points of connection. Just be real and be yourself, and don't be uptight about it.

Outside of managing money, what do you do in your spare time?

My biggest passion is taking pictures. I started 5-6 years ago, and I found I have a real affinity for taking pictures of flowers, old barns, and landscapes. Every year I take these pictures and make a calendar professionally for my clients.

What is your favorite restaurant that you frequently go to with your family?

I grew up down in the LA area, so I have a real passion for good Mexican food. So there's a little Mexican joint in Issaquah we frequent. Second to that would probably be Red Robin RRGB, since I have little boys, and they love Red Robin.