67 WALL STREET, New York - March 20, 2013 - The Wall Street Transcript has just published its Investing Strategies Report. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Long-Term Investing - Value Investing - Longer-Term Investing - Bottom-up Investing - Global Investing - High Quality Companies - Investment Strategies -
Companies include: US Airways Group, Inc. (LCC), Alaska Air Group Inc. (ALK), Tiffany & Co. (TIF), Coach Inc. (COH) and many more.
In the following excerpt from the Investing Strategies Report, an expert portfolio manager discusses his portfolio-construction strategy and investment philosophy:
TWST: What do you look for in a company on the equity side? You mentioned you are "value" and "contrarian," but what does that mean to you?
Mr. Barnett: The best way to describe what we do is perhaps by example. We look for various trends. One of them would be consolidation, which typically leads to increasing pricing power by the remaining participants. An example of that today is the airline industry.
With the merger of U.S. Airways (LCC) and American, we will have three carriers in the United States that will control 88% of the passenger revenues by volume. That represents a significant change from the historical pattern. Also, the airline industry now has higher barriers to entry than five or 10 years ago. And higher barriers to entry are good for the incumbents.
In terms of specific picks in the industry, for the industry, for conservative accounts, we like Alaska Airlines (ALK). It's a very well-capitalized, well-run operation. They are sort of the Switzerland of airlines because they belong to several alliances, and as a result of that, they get feeder traffic from many different carriers.
For more aggressive accounts, we like U.S. Airways, which at this time is the only way to buy stock in the newly combined American Airlines. We think that there is significant operating leverage here, as well as the ability to have price discipline and economies of scale.
TWST: Do you use a bottoms up approach for stock selection?
Mr. Barnett: We look at it from a bottom-up perspective but within certain larger scenarios. We screen over 14,000 stocks...
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.