Large Cap Value with a Catalyst Investing Explained: Jean-Baptiste Nadal, Managing Director and the Lead Portfolio Manager, Global and International, at Metropolitan West Capital Management

Wall Street Transcript

67 WALL STREET, New York - December 4, 2012 - The Wall Street Transcript has just published its Global Investing Strategies Report. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Global Investing - Investment Risk Management Strategies - Emerging Market Growth Dynamics - High Quality Companies

Companies include: Enersis S.A. (ENI), YPF S.A. (YPF), Apple Inc. (AAPL), Oracle Corp. (ORCL), Nike Inc. (NKE), Air Products & Chemicals Inc. (APD), The Home Depot, Inc. (HD), Lowe's Companies Inc. (LOW) and many others.

In the following excerpt from the Global Investing Strategies Report, an experienced portfolio manager discusses his investment methodology:

TWST: Would you give us a few other interesting names you have in the portfolio? And please tell us why you like them.

Mr. Nadal: We hold shares in Adidas (ADS.DE), one of the largest footwear and apparel companies in the world. The Adidas brand, which represents 70% of the company's sales, is a very powerful and appealing brand that dominates the soccer market and is making very strong inroads in the running segment. I think the company has very strong innovation capabilities, is a consistent free cash flow generator and has a very experienced management team.

Adidas has still a long way to go to post the level of margins achieved by its main competitor, Nike (NKE). Our main catalyst for our investment in Adidas is linked to the hard work the company is doing to close the profitability gap with Nike. One of the key factors for Adidas to improve its profitability is to gain more scale in the U.S. market and to establish the Reebok brand as a leading fitness and training brand in that market.

Also, we like a company we have invested into only recently, Air Products & Chemicals (APD), the world's fourth-largest supplier of industrial gases with a leading position in hydrogen. There are many things that led us to look at Air Products, but there are two key factors I would like to emphasize. First, although companies in emerging markets have traditionally manufactured themselves the industrial gases they need for their operations, they are increasingly outsourcing that activity to specialized companies like Air Products that have a depth of experience.

Secondly, because Air Products has a strong position in the hydrogen market, we expect it to benefit disproportionately from the increased oil refiners' needs for sour oil desulphurization as a consequence of the oil industry discovering more sour oil than sweet oil. So we believe that we have here an opportunity to participate in a very favorable industry trend, with a company that is extremely well positioned. Moreover, Air Products' stock is the cheapest of the four major industrial gas companies in the world.

A company we have taken some profit from is Home Depot (HD). We started to invest in the company about four years ago...

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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