Nonstop News Cycle Creates Volatility in Individual Securities as Marketplace Focuses on the Near Term
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: How does the large amount of data available today impact your operations?
Mr. Lysik: Information today gets into the marketplace much quicker than it used to. I believe the ability to share information instantaneously from multiple devices is driving the marketplace to focus that much more on near-term news or events. This in turn is creating a greater amount of volatility in individual securities compared to 15 years ago. With our disciplined investment approach we understand that market prices are not equal to value, providing us with greater opportunity to take advantage of the increased volatility by getting aggressive when others are fearful.
However, what I think is worth watching is whether market participants will try to limit the future investment returns of some value opportunities. Dell (DELL) is a great recent example. The market became fearful of weakening personal computer sales and technology spending late last year, and as a result Dell's market price traded below $10. We were holders of Dell with the belief that their intrinsic value is more than $20 based upon several different valuation approaches.
Therefore, with the price weakness, we became aggressive adding to our holdings, making the company one of our largest holding in both of our portfolios. However, Dell's senior management also recognizes the tremendous value of the company, and as a result is in the process of taking the company private at a price 40% higher than its price at the end of last year, but unfortunately for us at still a 50%-plus discount to its long-term fundamental value. Hopefully this experience doesn't become the norm, and value investors are allowed to fully benefit in a company's revaluation to their intrinsic value.
TWST: You mentioned you hold for the long term. What makes you sell or take another look at your holdings?
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.
