Market-Leading Education Companies Hold Valuable Assets and Provide Long-Term Value Opportunities Despite Volatility in Industry

Wall Street Transcript

67 WALL STREET, New York - March 5, 2013 - The Wall Street Transcript has just published its Large Cap Value Report. 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: Bank of America Corporation (BAC), Citigroup, Inc. (C), Hewlett-Packard Company (HPQ), International Business Machine (IBM), Corning Inc. (GLW), Marvell Technology Group Ltd. (MRVL), DeVry, Inc. (DV), Apollo Group Inc. (APOL), Dell Inc. (DELL) 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: You mentioned the education space. Who do you like there?

Mr. Lysik: Another industry currently going through dramatic change and dislocation is the education industry. It's been our historical experience when volatility is at its highest, that's usually because the marketplace is struggling to determine the appropriate valuation for securities, which has more often than not provided us with great long-term value opportunities.

Even in the midst of uncertainty, market-leading companies tend to have valuable assets that are temporarily underappreciated by the marketplace. If we can find opportunities where the industry is near trough profit margins and trough valuation multiples, an investor can benefit over time from the industry, returning to normalized margins or expanding valuation multiples. Sometimes we get lucky and both of those events begin to happen at the same time.

In the middle of 2012, we became very interested in DeVry (DV) as the stock price fell to $20 from a high near $70 back in the beginning of 2011. Over the past 20 years, DeVry has smartly put together leading educational offerings in business technology, medical and health care. As a result, DeVry leads the industry with strong job placements results and starting salaries north of $43,000 for graduates.

Like everyone in the industry, recent enrollment trends have been hurt by becoming less dependent on third-party channels and cyclically weak demand due to the economy and weakening consumer sentiment toward higher education. To help offset enrollment challenges, DeVry has focused on generating incremental cost-savings, which could add close to $1 per share in earnings over the next two years.

We believe as enrollment improves over the next couple of years, DeVry could generate $4 per share of normalized earnings...

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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