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Tilson's Value Picks Part 2: 'Cheaper' Blue-Chips Target, AmEx
Posted Oct 30, 2008 01:40pm EDT by Aaron Task in Investing, Recession, BankingHaving laid out a "sleep well" portfolio in part 1 of our interview, here Whitney Tilson offers recommendations of blue-chips for more adventurous investors.
The money manager's picks, Target and American Express, are in decidedly out-of-favor sectors and each in the news.
Target has been targeted by activist Bill Ackman of Pershing Square Capital, who yesterday unveiled a plan to unleash shareholder value (to use the preferred vernacular). In short, Ackman wants Target to spin out its real estate assets into a REIT.
The plan has been criticized as relying too heavily on financial engineering (which is out of favor, for sure) and potentially destabilizing Target's debt rating. But Tilson believes it's a smart plan based largely on the corporate tax advantages of renting vs. owning, as well as the upside for the REIT, which current Target shareholders would also own.
Tilson also believes Target is cheap based on its fundamentals, and feels the same about AmEx which today announced a restructuring plan aimed at cutting $1.8 billion in costs, including 10% of its workforce. The action is in response to what CEO Kenneth Chenault called: "One of the most challenging economic environments we've seen in many decades."
In response to the announcement, which occurred after we taped the accompanying segment, Tilson said: "Cutting costs is what all companies should do (and are doing) in these tough times."
Disclaimer: Tilson's fund is long both Target and American Express.
12 Comments
- Thursday October 30, 2008 02:53PM EDT
F1555mph and Jonny lke actually mean, Bye...Bye...Bye...
- Thursday October 30, 2008 02:58PM EDT
To "fix" housing we have to get the government out of it. Not going to happen, so we will continue the slide until you and I join the rank of losers. The only "winners" will be those who don't produce a damn thing but get their 3 squares and housing on my dime. That being said, Target looks like a good bet to me for the long haul no matter the economy due to their exceptional management discipline. American Express is a bit more problematic . . . I've owned it in the past but believe its time is gone as a power.
- Thursday October 30, 2008 03:17PM EDT
To fix housing we have to open up the mortgage market in all classes including JUMBO. You can not get a loan above 417K. In Ca. where that is above the national average the market is frozen. All segments of our ecomony are effected. And Getting Governent out of Mortgage is what got us where we are. It was the 2 year exploding mortgage that Greeenspan ignored that got this negative ball rolling. CDOs, and CDS and deritivates arre what put us on the fast track to failure. Banking has been regulated since we broke from the ENGLISH.. what historical reference do you have to show a healthy ecomony in a market that lacked Banking regulation.... ????
- Thursday October 30, 2008 03:41PM EDT
it is time to slowly get back in (or add to) the market......also...we are not in the worst times since the Great Depression...anyone remember the Carter years?.....Also I am better off than my parents were in the 50's
Yahoo! Finance User - Thursday October 30, 2008 03:57PM EDT
I used to pay the mortgage at 15% early 1980's. If the current government policy continues, we will see the high mortgage rate again.
- Thursday October 30, 2008 04:02PM EDT
Bobby.... I dont know i think this may be the worst since the great depression. I have no other comparision in time where retirement accounts and house values have fallen in the range of 40 to 50%. I am old enought to remember the Carter years and forclosures were not the issue they are now. Nor were FICO scores invented for banks to use as an excuse not to lend. We have come down to a NUMBER not people that is a new spin on all of this. Banks have got a cash influx and the President has called upon them to loan the money and they are not doing it. Just comments for comparison.. nice thing is your free to put as much money in the market as you want.. but if the banks wont loan what do they know that we do not? I think i have made my point.
- Thursday October 30, 2008 04:06PM EDT
Buying at this time appears sensible however given the unusual global downturn it would be prudent to have a wait and see attitude
- Thursday October 30, 2008 04:42PM EDT
BUY! As for the comment that it should take a downturn at the end of the day. Didn't happen. So, ya, the Dow really didn't change much except up. But really not much. 189 points is all it amounted to.
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- Thursday October 30, 2008 01:51PM EDT
There are obvious GREAT values out there. But now is NOT the time to even consider jumping in. Look at the Dow Jones. It's NOT moving. This should tell us that the last half hour of trading is going to be volitale. Either for the positive or for the negative. And I honestily believe it will take a down turn.