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Going Beyond the Numbers

Puerto Rico: Searching for Green Schools

Vincent DeAugustino, Investment Analyst, U.S. Equity

After Hurricane Maria’s 155-mile-per-hour winds devastated much of Puerto Rico’s  infrastructure, and before electricity was restored to much of the island, T. Rowe Price investment professional Vincent DeAugustino packed an overnight bag, and he and his team hopped on a plane headed for the island. Vincent, who covers the banking and specialty finance sectors, spent two days—most of the time in a rental car and from a helicopter—surveying damage, electricity transmission line reconstruction, and commerce activity.

“I expected to see busy retail centers and home improvement stores, but I didn’t expect to see how resilient the other areas of the economy were,” he says. As a longtime investor in Puerto Rico, Vincent was keenly aware of the challenges Puerto Ricans faced, most importantly, the significant loss of life linked to Hurricanes Maria and Irma. But he also witnessed firsthand that life was continuing as normally as possible. Furthermore, his research showed that credit from a banking standpoint probably wasn’t going to deteriorate as much as the valuations suggested and some financial prognosticators believed. Vincent and his team combined data-driven as well as field research, including video and aerial pictures to gain greater insights. “The humanitarian impact of the storms is still devastating—seeing the resilience and strength of Puerto Rico firsthand gave us the confidence to invest more heavily in the recovery,” he says.

Opening Quote The humanitarian impact of the storms is still devastating—seeing the resilience and strength of Puerto Rico firsthand gave us the confidence to invest more heavily in the recovery. Closing Quote

Going Beyond the Numbers Reveals the Full Story

At T. Rowe Price, our investment approach is to go beyond the numbers when evaluating which companies offer the best future investment potential. By meeting with executives, employees, and customers firsthand, we can ask the right questions to get a deeper understanding of where an industry stands and where it could go in the future. This rigorous research strategy is integral to Vincent’s investment process.

Using Teamwork to Uncover Opportunities

Last year, Vincent traveled to Dallas-Ft. Worth to meet with several auto lenders. Used car values had plummeted, and many lenders were retrenching after credit loss acceleration. Armed with his proprietary vertical vintage analyses, he was able to foresee improvement in used vehicle values at the same time specialty lenders were about to benefit from tighter industry underwriting. Confident in their long-term prospects, he called several meetings with T. Rowe Price portfolio managers and other investment professionals to present his perspective, which contrasted with the market view that auto lending would be increasingly unattractive. “I had several conversations to immerse them in the financial data and let them see the totality of our work and what we learned on the road,” Vincent says. His research convinced investment professionals to buy his recommended auto lender stocks.  

Positioning For Better Insight

Vincent and his team spent three days on the U.S. West Coast talking to venture capitalists, banking clients, real estate developers, attorneys, and brokers. To fully understand the financial industry, you must immerse yourself into other sectors and geographies to understand how the banks serve their clients and the risks they’re exposed to, Vincent says. “As a result of a truly bottoms-up approach, we get to see many more opportunities for investment.” Vincent is keeping a watchful eye on the industry to get ahead of the changes for investors, and while fundamental data analysis is key, Vincent’s on-site research helps him make better informed investment decisions.

Important Information
The specific securities identified and described above do not necessarily represent securities purchased, sold or recommended by T. Rowe Price. This information is not intended to be a recommendation to take any particular investment action and is subject to change.

This material is being furnished for general informational purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, and prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date written and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

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201811-675204

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