67 WALL STREET, New York - September 4, 2012 - The Wall Street Transcript has just published its Large-Cap Value Investing Strategies Report offering a timely review to serious investors. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Large Cap Investing - Downside Protection - Value Investing - Risk Mitigation
Companies include: Exxon Mobil Corp. (XOM), General Motors Corporation (GM), Target Corp. (TGT), Aetna Inc. (AET), WellPoint Inc. (WLP), The Travelers Companies, Inc. (TRV), ACE Limited (ACE), RenaissanceRe Holdings Ltd. (RNR), Xerox Corp. (XRX), ConocoPhillips (COP), Marathon Oil Corporation (MRO), Occidental Petroleum Corporati (OXY) and many others.
In the following excerpt from the Large-Cap Value Investing Strategies Report, expert portfolio manager Matthew Norris discusses his investment process and top picks:
TWST: Would you walk us through the stock-selection process?
Mr. Norris: As with most, I suppose, value investors, you kind of start with screening. I'm not really a quant guy, but to look, if you say there are maybe 500 stocks that would qualify for inclusion in a large-cap value product, you need a way to get down to the 10 best candidates, at least mathematically. So I stream for free cash flow yields and price stability and price to earnings and use of capital. Are they acquiring? Are they buying back shares? Are they paying dividends? I'm kind of finding stocks that, at least at first flush, would appear to have the characteristics that you might look for.
And then, that's the easy part, that takes about five minutes with today's computers, and then, it may take two weeks though to understand one company and exactly figure out what its true value is. What's the true intrinsic value of this company, and if they start trading at a significant discount to that, where I can buy it.
And then finally is whatever the issue is - is that ever going to get better? Some issues and questions don't get better. I mean most airlines go bankrupt over time. AMR (AAMRQ) went bankrupt. When I first started here, I thought General Motors (GM) would go bankrupt. It was just a matter of time when I didn't know it, and it was about 10 years earlier, but eventually I was right. So sometimes the problems can fix themselves. But if the problem can't fix itself, then it's not an investment opportunity.
TWST: Would you give us three examples of top holdings you believe are representative of your investment approach, and tell us why you selected each of those stocks?
For more from 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.