Lateef Fund: “You Can Almost Feel the Rumbling of What They are Calling the “Great Rotation” Into Equities.”

“Stock picking, plain and simple. And successful. That’s what attracts investors — individuals, private-wealth managers, and endowments — to Lateef Investment Management, a $4.5 billion money-management firm in Greenbrae, Calif., a small Marin County town just north of San Francisco. Three portfolio managers, Quoc Tran, James Tarkenton, and Matthew Sauer, scour and sift for underappreciated and mispriced blue-chip companies with strong balance sheets, strong business models, high free-cash flows, and attractive returns on capital. The trio is steeped in the art of value investing, having learned it from some of the best in the business, including Wally Weitz of Weitz Funds and John Rogers of Ariel Investments. Their flagship offering, the Lateef Fund (ticker: LIMAX), celebrated its fifth anniversary at year end by doing what it’s usually done: beating its benchmark.

Barron’s: Are you more bullish or bearish about the U.S. equity market after the run-up in the S&P 500 and Dow Jones industrials?

Sauer: You can almost feel the rumbling of what they are calling the “great rotation” into equities. We’re seeing it in fund flows. Corporate risk spreads are obviously tight. Junk-bond yields are low. That is positive for the market….”

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