Gautam Dhingra, Founder and CEO High Pointe Capital Management, LLC, Interviews with The Wall Street Transcript: of A Focus on Franchise Quality in Equity Selection
67 WALL STREET, New York - July 8, 2013 - 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 Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Bottom-Up Stock Selection - Cyclical Sectors, Exposure to Emerging Markets - Large-Cap, Deep-Value - Value Oriented Strategy - High-Quality Companies - Value Investing, Deep Value - Longer-Term Investing
Companies include: Valeant Pharmaceuticals Intern (VRX), Philip Morris International, I (PM), Schlumberger Limited (SLB), Halliburton Company (HAL), Baker Hughes Inc. (BHI) and many more.
In the following excerpt from the Investing Strategies Report, an expert portfolio manager discusses his portfolio-construction methodology and his investment philosophy:
TWST: Would you give us an example of what you consider an attractive stock pick today?
Mr. Dhingra: One of the companies that we have held in our portfolios for some time, and we continue to hold, is a company based in Canada, Valeant Pharmaceuticals (VRX). Valeant Pharmaceuticals is a company that's unlike any other pharmaceutical company. It is, to some extent, a financial engineering and private equity-type of company masquerading as a pharmaceutical company.
Traditionally, people have thought of pharmaceutical companies as those that invest billions of dollars in R&D with the hope of coming up with blockbuster drugs that they can then sell at a high price to mint money. Mike Pearson, the CEO of Valeant, came up with a completely different insight. He realized that the productivity of R&D dollars in the pharmaceutical industry had declined consistently for quite a long period of time. So he set about designing a company that spends very little on R&D, but instead focuses on buying existing products that were developed by other pharmaceuticals. He then cuts costs and takes advantage of tax laws to minimize the tax burden, and in this process generates extraordinary income from the same assets that a traditional pharmaceutical company could not.
Valeant is headquartered in Canada, which means that it does not face the same income repatriation restrictions that U.S. companies face. It has domiciled its intellectual property in locations that allow it to keep its tax burden minimal. So when you compare this company to other pharmaceuticals, you see that instead of spending 15% of the revenue on R&D the way a traditional pharmaceutical does, Valeant spends hardly 3% on R&D, so that saving goes directly to the bottom line. On top of that, the 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.
