67 WALL STREET, New York - September 19, 2013 - The Wall Street Transcript has just published its Multicap 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 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 - Large-Cap, Deep-Value - Value Oriented Strategy - Value Investing - Large Cap Investing
Companies include: Sony Corporation (SNE), Weight Watcher's International (WTW), VeriFone Holdings Inc. (PAY), Western Union Co. (WU), Devon Energy Corporation (DVN), Ultra Petroleum Corp. (UPL), General Electric Co. (GE), Microsoft Corporation (MSFT), Corning Inc. (GLW) and many more.
In the following excerpt from the Multicap Value Report, an expert money manager discusses his portfolio-construction methodology and his investment philosophy:
TWST: Would you give us some specific stock ideas?
Mr. Hanson: Some value ideas today seem to be coming from areas that have run into strong technological headwinds. Ideas like Sony (SNE) and Weight Watchers (WTW), VeriFone (PAY) and Western Union (WU) are wrestling with new competitors using new technologies. We think, however, these companies are strong enough to survive the threats. In energy, we think companies like Devon (DVN) and Ultra Petroleum (UPL) will benefit from all the newfound natural gas. We also like stable companies like General Electric (GE), which we think is reconfiguring itself effectively.
In technology we like Microsoft (MSFT), which is an incredible cash cow and may be changing more dramatically under a new leader. Also in technology, we like Corning (GLW), which is a real R&D play, and Canon (CAJ) looks like a turnaround to us. A more recent one, in the global food space, is Potash (POT-WI). Potash has come down quite sharply due to the possible collapse of the global potash cartel. But if you argue, as we do, that you are buying a global food play here, then buying on the sound of cannons, so to speak, makes sense.
We look at fundamentals, but we also understand that the market is very much based on human behavior and emotions, and that's what makes value investing successful and difficult. Ray Devoe, the strategist at Spencer Trask back in the 1970s, said that the stock market is only indirectly related to economics. It's a function of human fear, greed and apprehension, all overlaid on the business cycle. We think this is true. You want to buy when people lose their nerve, and maybe this is what is happening with Potash now.
TWST: Where do you look for ideas? It seems like you have such a broad universe.
Mr. Hanson: We run screens, putting in parameters for p/e and price-to-sales, dividend yields and things like that, and come up with a list. And then we start winnowing it down. The other way we find ideas is from general reading. I'm from a generation where you read a lot. Value ideas don't come and go in a minute. They often give you a long time to buy. Out-of-favor ideas often have to germinate to a level of "out-of-favoredness" before they can move back up. Sony, for instance, has been out of favor for years now. When it got down to $10 this year, only the true diehards were left in the stock. This is when value investing...
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.
- Utility Industry
- Devon Energy Corporation
- Sony Corporation