$50 Million to $9.5 Billion in 11 Years: An Exclusive Interview with James N. Nelson III of Herndon Capital Management

Wall Street Transcript

67 WALL STREET, New York - November 27, 2013 - The Wall Street Transcript has just published its current Investing Strategies Report. This special feature contains expert industry commentary through in-depth interviews with highly experienced Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Large-Cap, Deep-Value - Bottom-Up Stock Selection - Repurchase Activity - Value Oriented Strategy - Investment Risk Management Strategies - High-Quality Blue-Chip Companies - Free Cash Flow Yield - Alternative Investing, Ultimate Returns

Companies include: Celgene Corporation (CELG), Hershey Co. (HSY), Amazon.com Inc. (AMZN), Ford Motor Co. (F), Herbalife Ltd. (HLF), Philip Morris International, I (PM), Coach Inc. (COH)

In the following excerpt from the Investing Strategies Report, an experienced portfolio manager discusses his firm's growth stock investing methodology and current top picks:

TWST: Please begin with an introduction to Herndon Capital Management, including some highlights from the firm's history, a bit about your role there and an overview of your client base.

Mr. Nelson: Herndon is an institutional money management firm. Over the last 11 years, our assets under management have grown from slightly over $50 million to over $9.5 billion. We currently offer four investment strategies to clients - three domestic and one international. Our domestic strategies are large-cap growth and value, and midcap value. Our international strategy is large-cap core.

Our clients include public funds, mutual funds, foundations, corporations, endowments and managed account programs. Each of our four investment strategies relies on bottom-up analysis and individual stock selection. The firm's portfolios are managed by its three Principals: Drake Craig, Randy Cain and Ken Holley. Drake Craig has managed the growth strategy since 2002, and I joined his team in June 2012.

TWST: What is your role?

Mr. Nelson: I am an Associate Portfolio Manager for the large-cap growth strategy. The first question I usually get after stating my title is: What has changed since you joined the team? Then I respond, the process is the same. Nothing has changed. I just assist Drake with the implementation of the strategy. For example, if Drake and I were considering three investment ideas that were highlighted by our five-factor model, my involvement means that we would be able to expedite the consideration of those ideas. Drake is still the ultimate decision maker. My role is to facilitate the implementation and also add perspective.

Our investment process begins with assessing each name in our universe on five key factors. One of the five factors we consider in every investment candidate is the quality of earnings. We assess the quality of earnings regardless if the investment candidate is a company whose earnings momentum is strong driven by rapid growth like Celgene (CELG), or a company with less momentum in earnings growth and greater consistency like Hershey (HSY).

My role is to assist Drake in the process of evaluating the quality of earnings across the candidates, considering not only how that factor may impact absolute potential of the specific stock, but also how the total risk/return profile of the portfolio may be impacted if the stock was purchased.

TWST: How would you describe your investment philosophy for your large-cap growth strategy, and what are some aspects that make it unique?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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