A Fundamental Focus on Large-Cap Domestic Strategies on Growth and Value Sides: Expert Portfolio Manager Randell A. Cain Jr. Shares His Firm's Investment Philosophy with The Wall Street Transcript

Wall Street Transcript

67 WALL STREET, New York - July 10, 2013 - The Wall Street Transcript has just published its Investing in Dividend-Paying Companies 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 - Cyclical Sectors, Exposure to Emerging Markets - Large-Cap, Deep-Value - Value Oriented Strategy - High-Quality Companies - Value Investing, Deep Value - Longer-Term Investing

Companies include: The TJX Companies, Inc. (TJX), Ross Stores Inc. (ROST) and many more.

In the following excerpt from the Investing in Dividend-Paying Companies and Other Strategies Report, an expert portfolio manager discusses his portfolio-construction methodology and his investment philosphy:

TWST: You mentioned an emphasis on stock picking, but how would you describe your overall investment philosophy? Would you speak to the criteria you focus on when selecting individual securities?

Mr. Cain: The emphasis is on seeking out what we call "value-creating opportunities," and that is predicated on a belief that purchasing stocks, as frankly, with any asset, at a significant discount to what they actually bear is the long-term way of adding value to client assets. And so our approach is looking at what we call value creating opportunities, with each one of those words meaning something specific to how we actually manage money.

From the value standpoint, we will only consider stocks that have a minimum of 30% or more upside. And when we have that emphasis of 30% or more upside, we draw a contrast from doing top-down analysis, trying to interpret what the macroeconomic environment currently is, and then positioning ourselves strategically or tactically to take advantage of that. Instead, we look for stocks that we believe the market has mispriced, and the mispricing of those provides an opportunity for us to move on to assessing the "creating" aspect of the company, and that means, how solid it is as an ongoing concern. Our universe is the Russell 1000, so for the most part those are well-vetted-out companies, but you can occasionally find those that don't quite meet our criteria.

The last aspect is the opportunity, and we think this is really one of the things that helps us to keep a balanced perspective on things. What we like to tell clients is there are three things we can't do. We can't predict the timing, the duration or the magnitude of outperformance. The only thing we can do is try to position ourselves to take advantage of that, meaning that over reasonable periods of time, three to five years, we do expect to outperform. But in the interim, even if we have shown a propensity to outperform in smaller time segments, we can't really predict or control that very well. And so from an opportunity aspect...

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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