February 2024

David S. Intoppa has worked at Newton Investment Management for more than 17 years. Before embarking on a career in investment management, he earned a BA in economics from Tufts University and MBA from NYU. Here he discusses his experience and outlook for the natural resource space.

David S. Intoppa

Portfolio Manager at Newton Investment Management.

David has been at Newton Investment Management for more than 17 years and has co-managed the Global Natural Resources Strategy since 2020.

 

How long have you been at Newton?

I’ve been at BNY Mellon, specifically Newton Investment Management, for more than 17 years. I spent the first 15 years as a portfolio manager on the Large Cap Value Team and have been the co-manager of the Global Natural Resources Strategy since 2020.

Describe your background.

I’ve been a value investor for roughly 20 years and have been looking at the energy and commodity space for almost just as long. I studied economics as an undergrad at Tufts University and earned my MBA in finance and accounting at NYU. I love math and problem solving. Before BNY Mellon and business school, I worked for three years at State Street Research and Management where I was trained by legendary energy analysts Dan Rice and Denis Walsh.

What drew you to asset management?

I’m very competitive by nature. I loved competing in sports growing up and to me, asset management is like a very competitive game. There is no hiding from your numbers – you can see our results in the paper every day. Having it publicly known how I’m doing on a daily basis is a very motivating factor.

Describe your style as a portfolio manager.

We (the Newton Team) really take a long-term view, but me specifically, I’m a value manager at heart. I think that style of investing really plays well in the global natural resources arena. I look for companies that are inexpensive, have solid business fundamentals and most importantly, improving business momentum, or a catalyst, to force the market to recognize the value.

What outside experiences/past experiences do you bring to the role that help shape your perspective?

I’m a city kid so I think I naturally developed “street smarts.” Having a level of common sense is highly valued where I’m from. I think that has helped me interact with diverse management teams, interpret body language and be able to read between the lines as to what the goals of the companies are and how they are performing.

Is there a connection between your passions (outside of investing) and your work?

I enjoy reading to further my education and consistently learning on the job. That’s the exciting part about what I do — you never know it all. You’re consistently trying to make sure you’re on top of things and learning.

How would you describe Newton’s environment and approach?

Newton is really built around collaboration. We have a very specific pod structure, which is different than a lot of asset managers. The pod structure breaks down silos between analysts so there is constant back and forth. As an energy analyst I’m very interested in what the consumer analysts are saying, how it relates to demand, and so forth. Everybody’s very willing to share information with one another.

What would you say is the most interesting part of your day?

It changes depending on the day. Every morning we have a rapid-fire style meeting where all the analysts share what they see as interesting going on. It’s a nice summary of what’s on peoples minds and what’s important in the market.

I also talk to a lot of companies to learn about an organization’s management style, culture and how they’re aiming to succeed. I find talking to the people who are in the day-to-day intriguing.

When looking at a company, what metrics or qualities do you value most?

I think the ultimate measure of a company’s value is free cash flow and return in the form of dividends and buybacks to investors. For example, if a company has had a few down years and it’s priced accordingly, but I think that free cash flow is about to inflect that stock would be a buy.

What opportunities or themes are you most excited about in the natural resources space?

We think we’re very early in a supply-driven cycle. Cycles in this area tend to last about 10 years and the current bull cycle kicked off in 2020. After a decade of very poor performance from the equities and the returns that these companies were throwing off, shareholders revolted and started demanding higher returns on and off capital. Companies now being paid to increase returns on and off capital is creating a nice backdrop for macro supply in terms of limiting supply in the future.

What do you think the commodities/natural resources environment will look like in 5 to 10 years?

With all the talk of energy transition and electric vehicles there’s real fear that demand for oil has peaked and is going down. We actually think oil demand is going to continue to grow.

There are billions of people living in poverty and oil will be needed to develop their economy. While the Western world, and China for that matter, is starting to really take up electric vehicles and energy transition, we think there’s still a pretty great demand for oil in the future.