A Special Situation Value Stock Portfolio: A Wall Street Transcript Interview with Edwin C. Ciskowski, Senior Vice President and Co-Portfolio Manager with Keeley Asset Management Corp.

Wall Street Transcript

67 WALL STREET, New York - January 21, 2014 - The Wall Street Transcript has just published its current Value Investing and Other Strategies Report. This special feature contains expert industry commentary through in-depth interviews with highly experienced Money Managers. 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: Dover Corp. (DOV), EOG Resources, Inc. (EOG), BancorpSouth, Inc. (BXS), Fidelity National Financial, I (FNF), Lender Processing Services, In (LPS), Pfizer Inc. (PFE), Carrols Restaurant Group, Inc. (TAST), Walter Investment Management C (WAC), Walter Energy, Inc. (WLT), Cablevision Systems Corporatio (CVC), World Wrestling Entertainment (WWE)

In the following excerpt from the Value Investing and Other Strategies Report, an experienced portfolio manager discusses his methodology for finding top special situation value stocks:

TWST: Could you please give an overview of the KEELEY All Cap Value Fund?

Mr. Ciskowski: The KEELEY All Cap Value Fund is a go-anywhere fund, basically any market cap, any domicile, using our time-tested strategy of investing in companies that are inefficiently priced because they are undergoing some sort of change, maybe a restructuring, a spinoff, maybe they are emerging from bankruptcy, etc. These tend to be the situations where we find the most value, because they are either abandoned by the Street, they have limited coverage or they suffer from extremely negative coverage.

TWST: What are the fund's goals and guiding investment principles?

Mr. Ciskowski: The goals of the fund are to beat the Russell 3000 Value. That's our primary benchmark, but we also have a select group of peers who we consider to be excellent competitors, and the goal is to beat the benchmark as well as those peers, with less risk. The investment principals begin with some sort of catalyzing event that leads to change.

We then establish a private market value for the stock, and we look at the current stock price and we assess the margin of safety - this involves scenario analysis whereby we evaluate the upside opportunity versus the downside risk - relative to what we think the value of the enterprise may be. We also look at whether cash flow is sufficient and sustainable, particularly under a stress situation, and then we like to have a good balance sheet with the company having excellent access to liquidity.

TWST: Did the fund meet its objectives and goals this past year?

Mr. Ciskowski: It did. We typically perform an exhaustive research process of going through all the company filings and any other applicable publications. We try to leave no stone unturned, because we tend to take a long view. We are going to be three- to- five year investors, hopefully.

We feel that we have the opportunity to do an exhaustive amount of work upfront. We review catalysts. We do valuation work, including DCFs, comparables and liquidation analysis, and finally assess the margin of safety. Then the last factor we try to assess is the time. Time obviously has an impact on returns. We try to assess how long it's going to take management to deliver the business plan or changes that they are articulating, and if we get all that right, hopefully that leads to solid returns.

TWST: Could you give us a look at some of your top holdings in 2013 with a view to whether you see further upside in the coming year?

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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