Deep Values Still Exist Through Market Rebound: Award Winning Money Managers Advise Investors To Buy The Value Stocks Left Behind By The Rally

• On 8:43 am EST, Wednesday November 4, 2009

67 WALL STREET, New York - November 4, 2009 - The Wall Street Transcript has just published its TWST Small Cap Value Report offering a timely review of the sector to serious investors and industry executives. This 47 page feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Small-Cap Value - Capital Preservation - Sovereign Bonds - Precious Metals - Value-Investing - Companies with International Exposure - US-listed Chinese Companies - Risk Limitation - Industry-Diversified Portfolios - Long-Term Value - Micro-Cap Companies - Turnaround Situations - Strategic Buying - Fundamental Analysis

Companies include: Bridgepoint Education (BPI); Compass Minerals (CMP); Flexsteel (FLXS); Hardinge Corp (HDNG); Phillips-Van Heusen (PVH); Adobe (ADB); Affiliated Computer Services (ACS); Alliance Data Systems (ADS); American Water Works (AWK); Atlantic Tele-Network (ATNI); Celanese Chemical (CE); CenturyTel (CTL); Clean Energy Fuels (CLNE); Consolidated Graphics (CGX); Dell (DELL); Dillard's Department Stores (DDS); Drew Industries (DW); Educational Development Corporation (EDUC); First Acceptance Corp (FAC); Forestar Group (FOR); Fresh Del Monte (FDP); Hain Celestial (HAIN); Harbin Electric (HRBN); Huron Consulting (HURN); IMAX (IMAX); IMS Health (RX); Kennametal (KMT); Lamar Advertising (LAMR); NBTY (NTY); Nature's Sunshine Products (NATR); Nobility Homes (NOBH); Omniture, Inc. (OMTR); Perot Systems (PER); Pfizer (PFE); SPDR Barclays Capital International Treasury Bond Fund (BWX); SPDR Gold Trust (GLD); Silver Wheaton (SLW); Tellabs (TLAB); Temple-Inland (TIN); Tempur-Pedic (TPX); Tesoro (TSO); Valero (VLO); Verizon Wireless (VZ); Whole Foods (WFMI); Xerox (XRX).

In the following brief excerpt from just one of the interviews in the 47 page report, top tier money managers discuss some of their picks for investors.

GLENN SUSSMAN joined Lapides Asset Management LLC in July 2006 and serves as Analyst/Manager. He has over 25 years' experience conducting hands-on, proprietary research and managing smaller cap portfolios. Prior to joining Lapides, he was a Senior Vice President and an Analyst/Manager at Reich & Tang, where he spent eight years. Prior to Reich & Tang, he was Vice President and Principal at Richter Asset Management. Prior to that, he held the position of Vice President and Principal of Kurtz Capital Management. He holds a BBA from The George Washington University and an MBA from New York University.

STEVE WILSON founded Lapides Asset Management LLC and serves as the firm's Chief Investment Officer and as an Analyst/Manager. He has more than 25 years' experience conducting hands-on, proprietary research and managing portfolios of smaller cap securities. Prior to forming Lapides in mid-2005, he was an Analyst/Manager at Reich & Tang from 1986. Additionally, he served for eight years as Chief Investment Officer of the Capital Management Group at Reich & Tang. Before joining Reich & Tang, he was President of Home Capital Services, the investment management subsidiary of the Home Insurance Company. He has a BS from the Wharton School of the University of Pennsylvania and an MBA from New York University. He became a Chartered Financial Analyst in 1984 and is a member of the New York Society of Security Analysts. He was voted the top individual analyst by managements surveyed for the 2000 Reuters Investment Research Survey of Small to Mid Companies.

TWST: A lot of economists are talking about a W shaped recovery and the possibility of a double-dip recession, do you see that in your forecast?

Mr. Wilson: We don't make macroeconomic forecasts. We feel that our clients are best served if we focus on finding really good companies at really attractive prices. Good companies can thrive whether it's an L shaped recovery, a double-dip, what have you. They are going to gain share, they are going to get stronger, they are going to deploy their assets on their balance sheet to their own advantage and that's what is really going to pay off longer-term. Today, there are clearly two camps. One says, we have seen the worst and it's going to be only better going forward, and a lot of stocks have come to reflect that perspective. The other perspective says there will be a double-dip recession, or just a morbid recovery and the artificial stimulus has helped but won't last forever. Regardless of which is more accurate, we are going to invest in companies that we think can do well or better in those environments than their competitors. We try to figure out which companies can take advantage of whatever the environment is and what point should we step up and buy them.

TWST: What has worked in your investment discipline during these times?

Mr. Wilson: We had a number of companies where their business held up incredibly well through the downturn and they were rewarded for that. But in this bear market if a business did not hold up well the share price was punished severely. When the mood changed in March, investors began to not repel but instead embrace companies whose earnings were significantly impacted with the thought that there is a potential for a strong recovery. One stock we own is Tempur-Pedic (TPX). They sell high-end specialty mattresses and this is a product that investors assumed would be highly vulnerable in a recession. Their product is a discretionary purchase that can be deferred, they cost several thousand dollars and TPX suffered a meaningful reduction in overall demand. What people were missing and what got us excited about this stock, was its strong cash flow and competitive position. TPX was generating a significant amount of free cash, and they paid down $200 million of debt. To put that in perspective, at its low, the equity value of the company was only $300 million. Despite a greater than 20% decline in revenues, profitability held up very well. They still have double-digit operating margins and most of their competitors are struggling financially. TPX has continued to invest in new products, invest in marketing and gain market share and the stock is up five fold from its March low.

Mr. Sussman: Another stock that has worked well is NBTY (NTY). NBTY is the largest integrated manufacturer and supplier of nutritional products. They sell vitamins and supplements through the wholesale channel and through their own retail stores. They have made opportunistic acquisitions in the past and in July of last year they bought the assets of Leiner, which is a very large manufacturer of private labeled vitamins. Leiner was poorly run and one of the first things that the NBTY management team did after taking over those assets was increase the inventory position so they could improve customer service. During this period, raw material prices were rising quite dramatically and management chose not to pass the higher prices through. The result was some very happy customers who were getting much better service at attractive prices and some unhappy shareholders because the profitability in their wholesale segment with the newly acquired Leiner sales was not as good as expected. This is the kind of situation we like because the company did the right thing for the long-term even though it hurt in the short term. The company has since reported stronger than expected sales in the wholesale division and profitability has returned to levels that we had expected and the stock has responded accordingly.

The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This 47 page special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online .

The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.

For Information on subscribing to The Wall Street Transcript, please call 800/246-7673

Buzz up!