Pzena Investment Management, Inc (NYSE:PZN) Q3 2019 Earnings Conference Call - Final Transcript

Good morning and welcome to the Pzena Investment Management announces Third Quarter 2019 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Jessica Doran. Please go ahead.

Thank you, operator. Good morning and thank you for joining us on the Pzena Investment Management third quarter 2019 earnings call. I am Jessica Doran, Chief Financial Officer. With me today is our Chief Executive Officer and Co-Chief Investment Officer, Rich Pzena.

Our earnings press release contains the financial tables for the period we will be discussing. If you do not have a copy, it can be obtained in the Investor Relations section on our website at www.pzena.com. Replays of this call will be available for the next two weeks on our website.

Before we start, we need to remind you that today's call may contain forward-looking statements and projections. We ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from today's comments. Please note that we do not undertake to update such information to reflect the impact of circumstances or events going forward. In addition, please be advised that due to prohibitions on selective disclosures, we do not, as a matter of policy, disclose material that is not public information on our conference calls.

Now, let me turn the call over to Rich, who will discuss our current view of the investing environment.

Thanks Jessica. The classic value investment approach remains unchanged by recent events. Recall that our strategy is to buy businesses that are selling at low prices relative to their long-term sustainable earnings power. The availability of a business at a low price is nearly always due to uncertainty of our future earnings prospects.

We believe that through intensive research and patience, we can earn superior returns over the long-term. Today's uncertainty surrounds the outlook for global economic activity, and stocks exposed to that uncertainty have become extremely cheap. Unfortunately our portfolio has not been exposed to the small subset of the largest cap stocks, which have appreciated strongly as a result of their presumed isolation from global economic risk. The result is that the opportunity set open to us has increased dramatically.

We wrote these words in July of 1998, while the cycle did not turn immediately after we wrote these words. The turn that came was extraordinary for true value investors. These words are a remainder of the frustrating reality that at times must be borne by value investors. But, while the frustration has now lasted longer than in any other value cycle in measured history, the opportunity embedded in our portfolios appears to us to be equally extraordinary. Consider a couple of our large holdings as examples.

First is UBS. UBS is tarred with the Moniker bank, and yet they really are not a bank. They are a leading global wealth manager with a deep and stable client base, a growing business with high net worth and ultra