67 WALL STREET, New York - December 28, 2012 - The Wall Street Transcript has just published its Best Investment Strategy Interviews of 2012 Report offering a timely review of the sector to serious investors and industry executives. This special 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: Investment Strategies - Large Cap Investing - Investing in Emerging Markets - Investing in Energy - Value Investing - Downside Protection With Upside Participation - Macroeconomic Trends
Companies include: Caterpillar Inc. (CAT), Novartis AG (NVS), BP plc (BP) and many others.
In the following excerpt from the Best Investment Strategy Interviews of 2012 Report, an experienced Asia and Pacific value stock portfolio manager discusses his investment methodology and top stock picks:
TWST: Is the fund, due to any themes or trends, over- or underweight any particular sectors right now?
Mr. Sleeman: We're index agnostic, so we don't look at the world from a top-down perspective and pick where we're going to be. We are aware of the index even though we don't manage to it. We're overweight financials, which might surprise. We're also overweight consumables. We're underweight energy, and we're underweight materials.
I would say that from the underweight perspective, with oil prices having traded around the $120 level and certainly $100 priced into them, with the marginal dollar of production we think below $90, energy stocks haven't been particularly attractive. However, after the recent underperformance of that sector, it's starting to look more interesting to us.
How these stocks are categorized does matter. When I say we're overweight consumer discretionary, it's mainly media, hotel and leisure where we've been overweight. For example, on the media side, we've owned things like AUSTAR, which was an Australian pay TV company which was acquired by FOXTEL. We own another company called SinoMedia (0623.HK), which is one of our favorite names. SinoMedia is a stock that trades on six times earnings, but more than half of its market cap today is in cash, so it's really trading on three times earnings ex- that cash holding. SinoMedia sells advertising space for the CCTV, the state-owned broadcasting companies, into the market.
And Chinese companies typically spend twice the percentage of sales of Western companies on advertising and promotion, because they're trying to establish brand, which is quite interesting. So we like SinoMedia as a play on that. Another name that for whatever reason falls into the consumer discretionary bucket is called Seven Group (SVW.AX). It's a holding company that has two assets, a media company in Australia, and the largest Caterpillar (CAT) dealership in Australia and China. So it's actually an indirect play on the materials sector. We've taken profits in that name.
On the hotel and leisure side, we've been involved in a name called REXLot (0555.HK), which has the biggest footprint of lottery administration in China. The lottery revenues to the Chinese government are very important. REXLot has the license to distribute the machines that are used by the outlets.
They also distribute the scratchy cards that you and I are familiar with. And increasingly, they're going into single-game betting. The NBA is huge in China, and these guys offer betting, which was previously carried out illegally, but China has made that legal. So they're benefiting from that growth, as well as being a first-mover in mobile lotteries. It's quite an interesting business with very solid cash flows, trading at six times earnings. We also own the Mandarin Oriental Hotel (M04.SI) chain, as well as a stake in the French hotel group Accor (AC.PA), and another name that fits within that business, Ladbrokes (LAD.L), the U.K. betting shops chain.
The other area, financials, is one that may surprise you, where we actually have generated a lot of our outperformance...
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