How to Avoid the Value Trap by Identifying Current Catalysts: A Wall Street Transcript Interview with Michael S. Dzialo, President and Chief Investment Strategist at Managed Asset Portfolios

Wall Street Transcript

67 WALL STREET, New York - February 3, 2014 - 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: Investing Strategies - Value Investment - Dividend Reinvestment Strategy - Portfolio Managers

Companies include: Campbell Soup Co. (CPB), Johnson & Johnson (JNJ), Novartis AG (NVS), Wendy's/Arby's Group, Inc. (WEN), Vodafone Group plc (VOD), SeaChange International Inc. (SEAC), The Cheesecake Factory Incorpo (CAKE), Unilever plc (UL), Ford Motor Co. (F), Yahoo! Inc. (YHOO), Microsoft Corporation (MSFT), Cisco Systems, Inc. (CSCO)

In the following excerpt from the Investing Strategies Report, an experienced portfolio manager discusses his investing methodology and top picks for 2014:

TWST: Could you please give an overview of your firm and the funds you manage?

Mr. Dzialo: We are an SEC-regulated investment advisory firm based in Rochester, Michigan. We also have an office in downtown Chicago. Founded in 2000, we are a value-based investment firm. As of the third quarter end, 2013, we managed over $300 million in assets.

TWST: What are the themes of the two tradable funds you manage - the Catalyst/MAP Global Total Return Income Fund and the Catalyst/MAP Global Capital Appreciation Fund?

Mr. Dzialo: For the Catalyst/MAP Global Capital Appreciation Fund we are overweight the consumer staples, so we own names like Campbell's Soup (CPB) and Nestle (NESN.VX). We also own some of the larger health care firms such as Johnson & Johnson (JNJ) and Novartis (NVS).

The common theme is fairly defensive names that really don't need a strong economy to do well. We also have the same philosophy for the Global Total Return Income Fund, but keep in mind that the fund also has a fixed income component. Given our views on the fixed income arena today, our maturities are very short.

TWST: Can you tell us something about your guiding investment principles and philosophy as well as your valuation techniques; are they the same for each fund?

Mr. Dzialo: Yes. So being a value investment shop we're looking for stocks that have attractive valuation characteristics. So from a broad perspective we're looking for companies that have preferably low price to earnings, low price to sales, low price to book, low price to cash flow. We were big believers in dividends even before dividend investing was in vogue. But I'm sure every value manager you speak with tells you the same thing.

There are also two additional components that we incorporate into our investment decision process. One of which is looking for a catalyst to unlock value. I think one of the biggest risks for a value investor is falling into that proverbial value trap - the stock is cheap forever. So to help avoid falling into the value trap, we want to buy a stock that is cheap but also has a catalyst present to unlock that value that we see...

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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