67 WALL STREET, New York - December 5, 2011 - The Wall Street Transcript has just published its Investing Strategies Report offering a review of current asset investment policies from a variety of experienced money managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Long-Term Time Frame - Combining a Broad Range of Asset Classes - Impact of European Economic Troubles - High-Quality Blue Chip Companies - Share Buybacks and Dividends
Companies include: Green Mountain Coffee Roasters (GMCR); H&R Block (HRB); J.B. Hunt (JBHT); Tim Hortons (THI); Altria (MO); American Electric Power (AEP); Annaly (NLY); Berkshire Hathaway (BRK-A); Big Lots (BIG); Cardtronics (CATM); Chevron (CVX); Danaher (DHR); Equinix (EQIX); Gulfport Energy (GPOR); IBM (IBM); Intel (INTC); Limited Stores (LTD); Marten Transport (MRTN); Monro Muffler Brake (MNRO); Netflix (NFLX); Old Dominion (ODFL); Philip Morris (PM); Procter & Gamble (PG); Rackspace (RAX); Ross Stores (ROST); Sears' (SHLD); SkyWest Airlines (SKYW); Sysco Corporation (SYY); The Fresh Market (TFM); Treehouse Foods (THS); Wal-Mart (WMT); Whole Foods (WFM).
In the following brief excerpt from this Investing Strategies Report, an experienced Portfolio Manager discusses why the decision to sell a stock is made.
Keith Wibel, CFA, with his wife, founded Foothills Asset Management, Ltd., in 1995. Mr. Wibel designed and developed the proprietary quantitative model that is used in the firm's investment research. He began his career as a Stock Broker in 1980 with E.F. Hutton & Co. He joined Northern Trust Bank of Arizona in 1987, where he served as a Vice President of Trust Investments and was directly responsible for managing more than $200 million in client assets.
Mr. Wibel's experience includes managing assets for individuals, trusts, corporations, charitable organizations and retirement plans. He received a B.S. in finance from Arizona State University and has studied at the graduate school of business at the University of Michigan.
TWST: Given those risks and uncertainties, what is your risk management strategy?
Mr. Wibel: We start by looking at company balance sheets. We can't predict every twist and turn that's going to occur in the global economy or the financial system - nobody can. But we want to own businesses that are well financed and generate significant free cash flow. They will be able to weather whatever the global economy throws at them. Over the course of three to five years, stocks are very likely to outperform bonds or cash. The other risk management strategy that we use with our clients is to identify an appropriate investment horizon.
If somebody needs money in the next six months or the next year, it's probably not a good idea to invest that money in the stock market. On the other hand, if people are investing assets for the next three to five years or longer, the ups and downs in the stock market usually balance out and the long-term growth of the global economy prevails. Many people are trying to pass wealth to their children or grandchildren so it is their lifetimes that are relevant. Often, the investment horizon of our clients is longer than they think it is. Other things being equal, a longer time horizon favors a larger stock exposure.
TWST: Would you tell us a about the firm's sell discipline through an example of maybe one or two stocks that you've sold or reduced your position in during the last year?
Mr. Wibel: The sell discipline occurs for a couple of reasons. The happy occurrence is when we've been right about a stock and the fundamental story, and the markets have cooperated, and the stock becomes disproportionately large in our client portfolio. An example of that might be IBM (IBM). It's a stock that we've owned for a long time, but it is also a stock that had become disproportionately large. Back in the summer, we took some profits in IBM, but we still own a core position in our client portfolios.
Another example would be when the fundamental story just turns out to be wrong or that the execution of the business strategy is not as good as what we thought it would be. Sysco Corporation (SYY) is a wholesale distributor of food to restaurants. Sysco has a great balance sheet, but because of the sluggish economic environment that we're in and the fact that people are eating out less than they used to, there just wasn't much growth in earnings at Sysco. We finally decided that this sluggish economic environment that we're in is going to continue to be with us for a while, and so we sold the Sysco position.
TWST: How would you describe the investor who is going to be an ideal match for your investment approach and your firm?
The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with experienced Money Managers, public company CEOs and Equity Analysts. This 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.
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