BlackRock Portfolio Manager Shares His Favorite Stock Picks: Which

Wall Street Transcript

67 WALL STREET, New York - August 5, 2013 - The Wall Street Transcript has just published its Deep Value Investing and Other Strategies 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 Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Bottom-Up Stock Selection - Value Oriented Strategy - Value Investing - Deep Value - Small Cap Investing

Companies include: Microsoft Corporation (MSFT), The Home Depot, Inc. (HD), Lowe's Companies Inc. (LOW), VF Corp. (VFC), Centurytel, Inc. (CTL) and many more.

In the following excerpt from the Deep Value Investing and Other Strategies Report, an expert portfolio manager discusses his portfolio-construction methodology and his investment philosophy:

TWST: Would you share three examples of current holdings and tell us what attracted you to each stock?

Mr. Cassese: Let's start with a name like Home Depot (HD). It's a big home improvement retailer. And you go back to my comments earlier about the type of companies we look for and companies that have sustainable competitive advantages. Home Depot has what we would call two sustainable competitive advantages. One is geography. Think about the old saying about retail: "location, location, location." Home Depot has the best locations in most major cities. They were there first, they were there well before Lowe's (LOW). And so that's a competitive advantage that we believe is sustainable over time.

The second one is insulation from Internet competition. If you think about what's happened to a lot of the business models at retailers, the model has - and margins have been compressed because of online competition. Because of the nature of what Home Depot sells, they are mostly insulated from the Internet competition. So those will be the two sustainable competitive advantages they have.

And then they've had some company-specific things that we like and that attracted us to the name in the first place, so that a new management team came in, going back six or seven-plus years now. Also, there was a huge amount of opportunity for improvement in terms of the way that the stores were run and in terms of the way the logistics of the business were set up. And so we're seeing the benefits of that over the past few years as they really have done a much better job, both in in-store experience and from an inventory-management standpoint.

And then, on top of all of that, you have a housing recovery. There is a lot of pent-up demand for spending on the home, and we've really just started to see the housing market bottom and start to turn up. And we think, we have several years ahead of us here. We're spending, we'll catch up to "the normal," and perhaps even go past "normal," as people have put off projects for many years.

The second name I'll talk about is...

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.

Rates

View Comments (0)