Investing in Sound Fundamentals at a Reasonable Price: A Wall Street Transcript Interview with Marshall Kaplan and Steven Howard, Managing Directors at Global Investment Solutions

Wall Street Transcript

67 WALL STREET, New York - August 7, 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: ConAgra Foods, Inc. (CAG), Teleflex Inc. (TFX), AnnTaylor Stores Corp. (ANN), Thermo Fisher Scientific, Inc. (TMO), Life Technologies Corporation (LIFE) and many more.

In the following excerpt from the Deep Value Investing and Other Strategies Report, expert portfolio managers discuss their portfolio-construction methodologies and investment philosophies:

TWST: Would you provide us with a few examples of stocks that you believe are really representative of your approach?

Mr. Howard: But our investment decisions are driven primarily by bottom-up analysis, rather than the macro environment. For example, one of the things we study closely is how well a company allocates capital. Just as someone who is choosing an investment manager asks how well a potential candidate picks stocks, we spend a fair amount of time focusing on how well a management team allocates excess earnings and reinvests them for future growth.

Thermo Fisher Scientific (TMO), a recent addition to our portfolio in the second quarter 2013, is instructive from this standpoint. This is a company that at first glance may seem to have a fairly low organic GDP-plus type of growth rate. But TMO has been able to bolt on new business lines to its existing distribution infrastructure to achieve solid and sustainable EPS growth.

More recently, TMO announced that it would acquire a company called Life Technologies (LIFE), which we believe will be transformational. The deal is expected to close in early 2014. Excluding the positive impact of the Life deal, we believe the strong cost focus and the ability to leverage its distribution system allows the company to potentially turn organic topline growth rates of around 3%, into a consistent and greater EPS growth story.

The Life Technologies acquisition is a nice fit and deserves more explanation. Life Technologies is already a leader in life science tools and analytical tools, and benefits from a strong installed base, significant recurring revenues and strong cash flow. As part of the larger Thermo Fisher organization, we see the potential for both cost and revenue synergies. Further, we believe it fits well with the theme of increased lab spending over the long term. It complements Thermo's focus on providing solutions to the...

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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