Cutting Through Headline Noise to Find Growth at a Reasonable Price: Identifying the Key Metrics and Strategies to Manage Growth Through Market Volatility

Wall Street Transcript

67 WALL STREET, New York - May 2, 2013 - The Wall Street Transcript has just published its Investing in Financial Services 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: Investing in Financial Services - Interest Rates and Loan-Growth Strategies - Regulatory Outlook Gains Clarity - Long-Term Investing - Large Cap Investing - Longer-Term Investing

Companies include: Apple Inc. (AAPL) and many more.

In the following excerpt from the Investing in Financial Services Report, an expert portfolio manager shares his investment philosophy and his portfolio-construction methodology:

TWST: Give us an example of a company you like and explain the metrics that make it attractive.

Mr. Reid: One company that has been discussed over and over and over is Apple (AAPL). We first bought Apple at $65 a share in 2006. They had $2.25 a share of earnings, and today they are trading at $430, but they have $45 a share of earnings. So by our thinking, Apple today at $430 is much better value than it was at $65. The price is much higher, but the earnings have grown at a much faster rate than the price, and that is the value proposition.

We owned it up to $700, and we've done some trimming to our holdings, but the psychology that envelops the market always labels things prematurely. And people say you bought it at $700 when it was trading at ridiculous levels. I always look at them and say we were quite comfortable with Apple at $700. It was trading at just below our market multiple, it was growing at probably about three times the rate of the average company in America. If you back out the cash, it was trading at a very good discount to the market.

They are probably one of the greatest branding companies of our time, and they have shown a strong ability over years to be incredibly innovative. Now the retort is with Steve Jobs' death, innovation died. I think that has yet to be established, and I think that people are quite premature in saying that sort of thing. But I'll finish with my discussion of Apple by telling you...

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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