Investing in High-Quality Companies and Special Situations: a Wall Street Transcript Interview with Jonathan S. Vyorst, Senior Vice President of Paradigm Capital Management, Inc.

Wall Street Transcript

67 WALL STREET, New York - March 1, 2013 - The Wall Street Transcript has just published its Large Cap Value 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 Portfolio Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Value Investing - Long-Term Investing - Bottom-up Investing - Global Investing - High Quality Companies - Investment Strategies - Large Cap Investing

Companies include: Apple Inc. (AAPL), Sunoco Logistics Partners LP (SXL), Energy Transfer Partners L.P. (ETP), Viewpoint Financial Group (VPFG), Precision Castparts Corp. (PCP), Valero Energy Corp. (VLO) and many more.

In the following excerpt from the Large Cap Value Report, an expert portfolio manager discusses his investment strategy and some of this top picks.

TWST: What are some of the special situations you would invest in?

Mr. Vyorst: Special situations are an old and important part of value investing. A special situation is a company that is going through some sort of corporate transformation. That can include a merger or acquisition, a corporate spinoff, or a restructuring where a company that went bankrupt gets new management and discharges its debts.

Another type of special situation is a company that has hidden assets. I will talk about an example of a company that has a couple of those characteristics and that we made some money on last year. And I think it's a great example of what a special situation can be.

That company is Sunoco (SXL). Sunoco was acquired last year in the third quarter by Energy Transfer Partners (ETP). We had bought Sunoco back in January 2012, and at that time, people were selling off shares because the company had a refinery on the East Coast that was losing money. Sunoco had a plan to close down the refinery, and thereby stem its losses.

It also had other assets that made it much more valuable than the market recognized. It had 5,000 gas stations that are ubiquitous in the Northeast. It owned a publicly traded master limited partnership whose value you could easily ascertain by looking on Bloomberg or FactSet. It owned a metallurgical coking business, which was spun out right after we bought the company called SunCoke Energy (SXC). It also had been IPOed, and also had an ascertainable value, which you could easily see simply by getting a market quote. Additionally, Sunoco had net cash of $700 million.

When we added up all of the pieces of Sunoco, it was worth at least $50 and was selling for $35 a share. All one had to do to recognize its value was to...

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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