67 WALL STREET, New York - January 21, 2014 - The Wall Street Transcript has just published its current Value Investing and Other Strategies Report. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Small Cap Investing - Value Oriented Strategy - High-Quality Companies - Upside in Small-Cap Stocks - Bottom-Up Stock Selection - Portfolio Diversification with Closed-End Mutual Funds - High-Grade Fixed Income Securities - Sector Rotation Investing
Companies include: American International Group, (AIG), General Electric Co. (GE), Vodafone Group plc (VOD), Novartis AG (NVS), Apple Inc. (AAPL), Exxon Mobil Corp. (XOM), Google Inc. (GOOG), The Coca-Cola Company (KO), JPMorgan Chase & Co. (JPM), The TJX Companies, Inc. (TJX), QUALCOMM Inc. (QCOM), Costco Wholesale Corporation (COST), Arch Capital Group Ltd. (ACGL), Halliburton Company (HAL), United Technologies Corp. (UTX), Cerner Corp. (CERN), Arch Capital Group Ltd. (ACGL), Halliburton Company (HAL), United Technologies Corp. (UTX), Cerner Corp. (CERN), Amazon.com Inc. (AMZN), Athenahealth, Inc. (ATHN), Salesforce.com (CRM), Dril-Quip, Inc. (DRQ), Synovus Financial Corp. (SNV)
In the following excerpt from the Value Investing and Other Strategies Report, an experienced portfolio manager discusses his methodology for choosing his top picks among Closed End Funds:
TWST: Please give us an overview of Barrington Research Associates and the affiliated company, Barrington Asset Management.
Mr. Raclin: Barrington Research Associates, headquartered in Chicago, was founded in 1983. We have satellite offices in New York City, Cleveland, Minneapolis, Kansas City. I live in Sea Island, Georgia. We have approximately 40 employees - analysts, salesmen, traders, asset managers, corporate finance professionals - with a client base primarily institutional investors in the U.S. and Canada. Our asset management side invests for individuals, small company retirement plans and foundations. We follow an approximate 125 companies, holding two conferences each year featuring 40 to 50 individual companies as potential investment ideas.
TWST: What asset classes and sectors do you emphasize?
Mr. Raclin: We follow approximately 125 companies, large, midcap and smaller companies to include business services, health care, energy, technology and media. It's very much a bottom-up, company-specific approach, as opposed to producing an economic or investment overview and then trying to fill in various slots. We spend a significant amount of time traveling with company managements. Institutional investors really appreciate one-on-one visits versus a blizzard of written reports.
On the asset management side, individual portfolio managers follow their own separate strategy. Mine is the Enterprise Portfolio, which is restricted to a universe of closed-end mutual funds. I seldom, if ever, purchase individual securities. I do not purchase commodities, derivatives, nor participate in public offerings.
TWST: Overall, what do you see as the risks and the rewards of a closed-end mutual fund versus an open-end fund?
Mr. Raclin: I have three specific objectives. The first is diversification of assets. I strongly believe that it is very difficult for any one investor to be knowledgeable across a number of different opportunity areas. Using closed-end funds I can access managers with very specific expertise, managers who are expert in agricultural and water investments, large-cap international ideas, fixed income area, whether convertibles or straight debt. So diversification was the first objective.
The second objective is a valuation metric. It is very difficult for anyone to have repetitive success in identifying cheap or expensive. Closed-end fund portfolios are priced every evening. The security you own is a stock that trades on an exchange representing ownership of the underlying portfolio. With the net asset value available every evening, you have the opportunity of knowing whether the stock you are buying is selling at a premium or at a discount to the underlying net asset value. I've found the idea of buying a dollar for $0.90 can sometime give a certain margin of safety.
Lastly, I'm very focused toward distributions. My funds pay monthly and/or quarterly distributions, and in specific cases distributions are tax-advantaged as a return of capital, which comes from selling options on the portfolio...
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.
- Basic Materials Industry
- American International Group
- United Technologies Corp.
- Halliburton Company
- Apple Inc.
- Portfolio Diversification
- Costco Wholesale Corporation