John Barr’s Laser Stock Picks: LASR, AVAV

0:00Welcome back to opening bell. Time for the very latest on the floor and it's out pleasure to bring in John Farr, a portfolio manager. Need him aggressive growth fund. I'm so glad you are with us. Obviously recognized by Morningstar 5 star. Recognized last week by IBD as the only small mid cap fund to beat the S&P 500 over one three five and 10 years. Congratulations on that. I'm so glad you're with us. Tell us a little bit about how you're feeling about the market. Yeah, so I manage the need him aggressive growth fund and one of the key tenants is long-term holding. So turnover is about 10%. So we hold for about 10 years. So we think through market turmoil and market challenges and look for companies that can outperform over the long term. So how do you find those? I mean that's a real buy and hold strategy isn't it? It is buy and hold and we're

1:02really focused on infrastructure broadly defined and that includes some traditional but it also includes defense defense infrastructure and that's a pretty timely topic right now. Yeah let's talk about some of the top holdings that you've had in there because you've had them for a long time. What have been some of the best bets that you've had? Well I would I would folks our largest holding as of the end of December was end light in the symbol is LASR and they make directed energy systems initially for commercial applications cutting and welding but then they also are used for counter drones and that is really an important area of defense in the last last few years. High power lasers for defense and space applications I mean it's amazing that you found this kind of company I mean you must be looking at

2:03the balance sheet that's a great chart right there is that one that you'll continue to hold on to? So we knew it at the IPO in 2018 we did a deep dive on it and bought in 2022 and at that point there was very little discussion of you couldn't find anything on directed energy lasers in the marketplace in the press or anywhere but we thought that within five years they could be widely deployed and as it turns out they started to be deployed last year so we bought in 2022 and it's it is a long-term holding of the fund and one we think they're great prospects for. Are you still feeling passionate about the market? I know you were recently quoted in the stock market Maestro's book that came out you've year-round for a long time how do you feel about stock picking

3:04and managing money here? Do you still have passion for this? Do you still feel optimistic? Incredibly optimistic and if whatever the short-term turmoil might be if you look out two years three years four years things are going to be great things are going to be fine and therefore there's always opportunities in investing. Tell me about some of the other names that you've held for a long time and what you know when we talk about the aggressive growth fund that you have small caps versus mid and large caps I mean where are you putting most of the money now? So the fund is a small cap fund so we're focused on small caps but when you hold them for a long period of time and they're very successful they'll grow to be mid caps or even large caps so that's another important part of the strategy but the new investments are small caps. How do you feel about the rate environment with these small caps as rates have been creeping higher?

4:09Margin of safety is important for us so we look at the balance sheets and we don't invest in companies that have significant debt so refinancing is not really a significant issue and we're really looking at companies that have secular growth stories behind them like the end light and interest rates aren't going to be it's not going to matter that way. Yeah in the defensive area with drones what about technology I know you have infrastructure picks and shovels for infrastructure also looking at technology manufacturing and defense we talked about defense a little bit tell me about technology what kind of names have you been watching or you like? So on the technology side of semiconductor manufacturing has been an area that we've been invested in since 2010 when I took over the fund. Secondly data centers so we are invested in small caps that provide some of the picks and shovels for the data center

5:15build out and also for semiconductor manufacturing. What about arrow environment and that one is a key one that you have as well. A-V-A-V. A-V-A-V is one you have do you still hold it? We don't and we never we haven't but it is a very promising company they were the originators building drones and still today very important business for them but we're really interested because they put together laser systems which incorporate lasers such as those made by N-Lite and they were also A-V-A-V locust laser systems were the first to be used in the and deployed in the U.S. and it was just last year. Just a quick final question the Iran War how do you begin to fix the market short term long term quickly. I the Iran War in the short term I we think long term so I don't know short

6:19term and I think long term it it will be over and hopefully it will create peace in the in the Middle East and elsewhere. John Baranita aggressive growth fund nice to see you thank you for being here