67 WALL STREET, New York - October 31, 2012 - The Wall Street Transcript has just published its Investing Strategies 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 public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Socially Responsible Investing - Value Investing - Small-Cap Investing - Evidence-Based Investing - Risk Management - Downside Protection
Companies include: Rudolph Technologies Inc. (RTEC), OmniVision Technologies Inc. (OVTI), Apple Inc. (AAPL), Sony Corporation (SNE), Portfolio Recovery Associates (PRAA), Encore Capital Group, Inc. (ECPG), Exactech Inc. (EXAC), Stryker Corp. (SYK), CONMED Corp. (CNMD)
In the following excerpt from the Investing Strategies Report, an experienced portfolio manager discusses his top picks:
TWST: Would you give us some specific holdings you like right now?
Mr. Harman: Our biggest weights right now sectorwise are financials, technology and health care. I'm not talking about an overweight relative to index. I'm talking in absolute terms, those are our biggest weights.
Within technology, we've got a couple of interesting things that we've taken on. We've actually held these for a little while this year. One is Rudolph Technologies (RTEC). Rudolph Technologies is involved in inspection and metrology, which is analytical and yield management, both hardware and software, for the semiconductor industry.
Another one that we hold in technology is OmniVision (OVTI). OmniVision really has had struggles. What they do is camera chips. So they'll make the camera chips and related components for cameras that go into iPads and other products. A big driver for these guys is the Apple (AAPL) products, to the extent that they can get involved with Apple. They have been in a real big fight with Sony (SNE) to be the primary camera in Apple products, like the newer iPhone and the new iPads. So the stock tends to get a little punished when analysts rip apart a new iPad, and they find out that it's a Sony chip in there and not the OmniVision chip. But one of the things that we like about that name as value investors is the balance sheet, in that they have really good working capital.
Within financials, our big weights there are Portfolio Recovery Associates (PRAA) and Encore Capital (ECPG). Those two companies actually do the same thing, and it's a debt recovery business, where they're buying the written-off credit card receivables and other debts, then they go and collect on them. They are buying the stuff at pennies on the dollar, collect a portion of it and make their money that way. It doesn't sound like much, but they're actually really good businesses. Again, we feel they're fundamentally solid companies. We like both of those. Both of those, by the way, we consider to be financials, but I believe the GICS code puts them into industrials.
Health care is another area that we have a pretty good weighting for a bunch of reasons. Again, this is a value-driven thing, where we can find some little companies that have real interesting valuations like Exactech (EXAC). Exactech does knees and extremity, hip joint, some spine stuff, similar to a Stryker (SYK) and its cohorts. We've had Exactech for a long time.
By the way, we are generally looking at the hold versus sell decision on the portfolio that we own, so we're updating our target prices, which are 12-month targets and 18-month targets, at least four times a year on every smid name. That's what gives us comfort on how we make the sell decision.
Another one we have in there is Conmed (CNMD), and Conmed makes devices and equipment for primarily minimally invasive surgical procedures, things like arthroscopy and powered surgical tools.
TWST: In terms of selling, once it reaches your target, you would sell. Are there other reasons you would sell?
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.
- Technology & Electronics