Podcast Summary

Episode Overview

Podcast: The Master Investor Podcast with Wilfred Frost
Guest: Stephanie Link, Chief Investment Officer & Portfolio Manager at Hightower Advisors
Date: July 15, 2025
Episode Title: Stephanie Link: Brave, Bullish, and Beating the Noise

In this episode, Wilfred Frost interviews Stephanie Link, a highly respected CIO and regular CNBC guest, about her bullish outlook on U.S. markets, sector strategies, investment philosophy, and experiences as a leading woman in finance. The conversation covers macroeconomic trends, the impact of deregulation, top stock ideas, and practical advice for investors—interwoven with Stephanie's trademark mix of disciplined optimism and real-world perspective.

Key Discussion Points & Insights

1. The State of the U.S. Economy and Markets

• Bullish but Realistic:
  Stephanie underscores her confidence in the resilience and growth trajectory of the U.S. economy—despite persistent macro uncertainties (tariffs, geopolitics, inflation, Fed policy, etc.).
• Macro Drivers:
  • Atlanta Fed Tracker shows real-time growth of 2.5%.
  • Anticipation of further growth via deregulation and the recently passed tax bill (02:38).
  • U.S. consumer remains the key engine: "The consumer has a job. The labor market is strong, wages are actually above trend...and that consumer is 70% of our economy." (03:27)
• Manufacturing Renaissance:
  Cites U.S. and global manufacturing revival driven by AI, data centers, and grid/power investments (03:55).
• Markets Outlook:
  Link believes earnings are the primary market driver—"stocks follow profits on the way up and on the way down" (04:16).
• Cash Deployment:
  She moved from 9% to 1% cash between February and now, buying during April's 15% dip (04:53).

2. Risks: Debt, Deficit, and Bond Market

• Short-Term vs. Long-Term:
  While alluding to U.S. fiscal profligacy, Stephanie argues growth can buy time: "I always worry about the debt and the deficits...I think my 18 year old daughter, when she's my age, she's going to have to deal with the debt and the deficits, not us." (05:56)
• If Bond Markets Wobble?
  She expects Fed intervention if disorder arises (06:51): "If we lost control of the bond market, I think the Fed would absolutely step in."

3. Deregulation and U.S. Banks (09:41)

• Sea Change for Banks:
  • Recent stress tests were strong; banks now can hold less capital, enabling more buybacks and increased dividends.
  • Other regulations like SLR and "Basel III Endgame" are being relaxed.
  • SEC may lower public markets costs—combating the severe drop in U.S. public companies from 8,000 to 4,000 since '96.
• Market Impact:
  • Stephanie sees deregulation as "multiple enhancing." Banks are "still going to have to have a lot of capital...but I do think this is a multiple enhancing event" (10:08).
  • Expects broader M&A activity benefiting firms like Goldman Sachs and Morgan Stanley.

4. Bank Valuations and Top Picks (11:53)

• On JPMorgan:
  "I don't own J.P. Morgan...It is expensive for a reason. It's the best performing bank since 2008..." (11:53)
  • Sees more attractive values in Wells Fargo, Truist, and Bank of America.
• On Investment Banks:
  Picks Morgan Stanley over Goldman, praising new leadership and a robust M&A pipeline (13:28).

5. Private Equity and Diversification

• On KKR:
  Remains confident in private equity's role as a diversifier, despite recent sector pullbacks: "KKR is one of the best. And the stock, when I added to it, was down about 20% from its highs." (14:22)

6. Sector Preferences & Themes

• Top Two Sector Picks:
  Industrials—Buoyed by AI, data center construction, grid upgrades, and power demand.
  Cybersecurity—"I think cybersecurity is going to be bigger than AI because of AI." Predicts massive consolidation; remains overweight in this sector (15:15).
• International Exposure:
  Favors U.S. multinationals for indirect foreign exposure, with a direct ETF position in India (16:32).

Stephanie Link’s Investment Philosophy

• Style: "Growth at a reasonable price. I'm very valuation centric." (18:01)
• Process:
  • Strategic macro/thematic weightings.
  • Filters for industry leaders: "It's really, really important to try to find the number one or number two player in any given industry."
  • Prefers high-quality companies with strong management, good balance sheets, and free cash flow (18:01).
• On Buying Under Pressure:
  Describes April as "like a kid in a candy store" for bargain stock shopping (00:00 and 19:15).

Top Five Stock Picks (20:26–24:33)

1. Uber (19:34)

   • Bought after a 25% decline; first time owning due to previous overvaluation.
   • Now "trading at about 18 times EBITDA...the last five-year average is 49 times".
   • Ubiquitous brand, expanding offerings, great management.

2. Vertiv Holdings (20:38)

   • Liquid cooling/data center play.
   • Projected mid-teens revenue growth, 25% earnings growth, and significant margin expansion.
   • Led by Dave Cody (Honeywell former CEO).

3. Boeing (21:39)

   • Turnaround story post-crises, now run by Kelly Ortberg who is "fixing the culture of the company."
   • "They're a duopoly with Airbus...13 years worth of backlog."
   • If execution continues, free cash flow could grow from negative $2B to +$12B by 2027.

4. Palo Alto Networks (22:36)

   • Underperforming peers due to product transition.
   • Trades at 13x sales vs. CrowdStrike at 29x.
   • "I really truly believe that you just buy cybersecurity and hold it for a decade." (23:13)

5. Amazon (23:32)

   • "Win a lot of different ways": retail, AWS, advertising.
   • Retail operational improvements and international expansion are underappreciated.
   • "Stock's only up 3% on the year...trades at 14 times EBITDA, historical average is 18 times."

Bonus Pick:

• DR Horton (24:33)
  • Leading U.S. homebuilder, potential upside if rates fall.
  • "Stock is trading at 10 times forward estimates...5 million millennials that want to buy a first time home..."
  • Patience required until interest rates drop.

Memorable Quotes & Moments

• On the consumer’s role:

  "The consumer has a job. The labor market is strong, wages are above trend. Inflation has made progress...That consumer is 70% of our economy. So we root for the consumer."
  — Stephanie Link (03:27)

• On embracing volatility:

  "Back in April, I was like a kid in a candy store. It certainly wasn't easy to be buying. But when you have some really high-quality companies down 10, 15, 20, 25%...that's my cup of tea, as you would say."
  — Stephanie Link (00:00 & 19:15)

• On bank multiples:

  "When people say these stocks have had a nice run—yeah, they have, but I do think they can continue to see multiple expansion because I think you're going to see earnings growth."
  — Stephanie Link (11:08)

• On Cybersecurity:

  "I think that cybersecurity is going to be bigger than AI because of AI. AI is not secure."
  — Stephanie Link (15:21)

• On perseverance in finance:

  "We still have a long way to go, but we've come a long way too. When I first started...we couldn't wear pantsuits...It's really all about your work ethic and keeping your head down and working harder and smarter than the next person."
  — Stephanie Link (25:53)

Timestamps of Noteworthy Segments

| Timestamp | Segment | |------------|--------------------------------------------------------------------------| | 00:00 | Stephanie on buying during market volatility | | 02:38 | Macro outlook and confidence in U.S. growth | | 05:56 | Debt, deficits, and intergenerational perspective | | 09:41 | U.S. bank deregulation and capital requirements | | 13:28 | Investment bank picks: Morgan Stanley vs Goldman Sachs | | 15:15 | Top two sector themes: Industrials and Cybersecurity | | 18:01 | Stephanie’s investment philosophy and process | | 19:34 | Top stock picks: Uber, Vertiv, Boeing, Palo Alto Networks, Amazon | | 24:33 | Homebuilder play: DR Horton | | 25:53 | Advice for women in finance | | 27:23 | Best and worst investments (General Electric & Vale) | | 29:06 | Final advice: Start early, dollar-cost average into the S&P 500 |

Practical Advice & Takeaways

• Dollar-Cost Averaging:
  "Buy some shares every month, dollar cost average in the S&P 500...start early because the lessons are compounding is so incredibly powerful." (29:06)
• Stick to Quality:
  Focus on industry leaders with strong management and financial durability.
• Be Brave in Volatility:
  Take advantage of market dips in high-quality stocks.
• Sector Focus:
  Industrial, infrastructure, data center, and cybersecurity themes hold long runway.
• Women in Finance:
  Outwork others, find mentors, build networks, and know opportunities are growing.