67 WALL STREET, New York - June 10, 2014 - The Wall Street Transcript has just published its Investing Strategies Report. This special feature contains expert industry commentary through in-depth interviews with professional Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Secular Growth Themes - Small Cap Investing - All-Cap Investing - Bottom-Up Stock Selection - Quality of Business - Growth at a Reasonable Price - Long/Short Strategy - Investment Risk/Return
Companies include: Warner Chilcott Limited (WCRX), Forest Laboratories Inc. (FRX), McKesson Corp. (MCK), Lear Corp. (LEA), TRW Automotive Holdings Corp. (TRW), Methode Electronics Inc. (MEI), Ford Motor Co. (F), Nu Skin Enterprises Inc. (NUS), Herbalife Ltd. (HLF), LSI Corporation (LSI), Armstrong World Industries, In (AWI), LaBarge Inc. (LB) and many others.
In the following excerpt from the Investing Strategies Report, a highly experienced portfolio manager discusses his methodology and top stock picks for investors:
TWST: What are the key metrics that you look at? What do you consider most important when you evaluate a company in that space?
Mr. Miska: We tend to be fairly conservative investors, so we're grounded on fundamental factors and look for investments with exemplary characteristics. We look for a history of profitability and companies that are estimated to be profitable going forward. We seek high return on equity measures, strong margins, and defendable balance sheets typically with more cash than debt on their balance sheets.
Another characteristic we look for given our conservative nature are reasonable valuations, so we look for high-quality companies that we believe exhibit good growth characteristics but are not trading at excessive valuations relative to the market or relative to their competitors. We also focus on growth characteristics, so we like to see companies that can generate above-market growth or above industry or sector-level growth and sustain that growth for a number of years.
One of our disciplines is that we tend to have fairly low turnover and generally hold our stocks for a number of years. So we like to get out ahead of events or a series of events that will allow the company to continue to grow in the future.
TWST: What were some Opportunity Fund top performers in 2013, and how has the portfolio evolved year to date?
Mr. Miska: It was a very strong year for the markets in 2013. We had incredibly good performance. We were up almost 40% for the year, and it was pretty broad-based. So I am hard-pressed to come up with a lot of areas in the portfolio that did not perform well. But to narrow it down we had very strong performance in our health care stocks. Actavis (ACT), a larger generic and branded drug manufacturer, was one of the leaders. This was not the holding we bought, however. In fact, we wound up owning Actavis through M&A events.
We owned a company called Watson Pharmaceuticals, which was bought out by Actavis. We also happened to own another smaller name in this Fund called Warner Chilcott (WCRX), which was subsequently bought by the combined Watson and Actavis last year. So we wound up with a fairly sizable position in the combined companies.
We continue to be very enthused about their strategy. They are largely a consolidation player in the specialty pharmaceutical and generic pharmaceuticals space. They recently announced another deal, as they will acquire Forest Labs (FRX), generating further earnings accretion and potential upside for us.
Another one of our top performers was a company called McKesson (MCK), a leading drug distributor that also has a health care IT company...
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.