50 Year Portfolio Management Veteran Donald W. Hodges Shares His Successful Investing Methods

67 WALL STREET, New York - January 14, 2013 - The Wall Street Transcript has just published its All-Cap Growth Investing and Other Strategies Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: All-Cap Growth Investing - Closed-end Mutual Funds - Investing in Gold - Bottom-up Investing

Companies include: Texas Pacific Land Trust (TPL), Krispy Kreme Doughnuts Inc. (KKD), Belo Corp. (BLC), Cracker Barrel Old Country Sto (CBRL), A. H. Belo Corporation (AHC) and many others.

In the following excerpt from the All-Cap Growth Investing and Other Strategies Report, a portfolio manager with 50 years of U.S. securities markets experience discusses his investing methodology:

TWST: Please provide us with a brief history of Hodges Capital Management.

Mr. Hodges: The history of Hodges Capital Management, in a way, is an extension of my history in the business. I started in the investment business in 1960 as a retail broker with Merrill Lynch in Oklahoma City. I left Merrill in 1968, came to Dallas and was involved with a small brokerage firm here in Dallas, which later went out of business in the difficult years of 1968, 1969 and 1970. Then I joined Rauscher Pierce, which was a regional retail brokerage firm, and was there about 15 years. I eventually became the President of Rauscher.

My son Craig and I started First Dallas Securities in 1989. Then in 1992, we started our first mutual fund, the Hodges Fund (HDPMX), a multicap "go-anywhere" fund. In 2007, we started a Small Cap fund (HDPSX), because the small-cap portion of our multicap fund was the best-performing part of that fund. We started our small-cap fund almost on a market high in December 2007. As you know, we have had good numbers. It's among the top-rated small-cap funds. We've just completed our five years on December 18.

In September 2009, we started three other highly specific funds: an Equity Income fund (HDPEX), where we invest for income and appreciation; a Blue Chip 25 fund (HDPBX), where we invest in 25 large blue-chip stocks; and then we launched a Pure Contrarian fund (HDPCX), where we only buy things that are out of favor but where we think there is exceptional opportunity for recovery. That is a description of the history and focus of our mutual fund universe.

TWST: You highlighted some of the different funds and strategies. How would you describe your overall investing philosophy?

Mr. Hodges: Clearly, we are bottom up, where our obsession and passion is individual companies. We pay very little attention to the noise going on about the economy, about interest rates, about what's going on in Europe, etc. We look at individual companies to determine how they are doing regardless of the big picture. We have five capable analysts who talk and interface with companies every day. Last year, our five analysts had over 2,100 company contacts involving about 650 individual companies. We focus on what's going in companies. We are not trying to look at the big picture and determine what the market is going to do. We are looking for value in individual stocks. It's a system that has served us and our investors well.

TWST: What defines a good stock for you?

Mr. Hodges: There are a multitude of reasons that we select a stock. Let me give you one example...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.