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Large Financials Trade Below Book Value: an Expert Portfolio Manager Interviews with The Wall Street Transcript and Analyzes a Turn in the Tide for Cheap Financials

67 WALL STREET, New York - February 19, 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 Portfolio Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Value Investing - Long-Term Investing - Longer-Term Investing - All-Cap Growth Investing - Bottom-up Investing - Global Investing - Emerging Market Growth Dynamics - High Quality Companies - Investment Strategies - Investing in Emerging Markets

Companies include: QUALCOMM Inc. (QCOM), Morgan Stanley (MS), Johnson & Johnson (JNJ), Wal-Mart Stores Inc. (WMT), Exxon Mobil Corp. (XOM), Boeing Co. (BA), Valero Energy Corp. (VLO), Enbridge Inc. (ENB), JPMorgan Chase & Co. (JPM), Goldman Sachs Group Inc. (GS), Apple Inc. (AAPL) and many more.

In the following excerpt from the Investing Strategies Report, an expert portfolio manager discusses his portfolio-building streategy and his investment strategy.

TWST: Give us a little bit more about your overall investment philosophy.

Mr. Grisanti: We buy into the efficient market hypothesis mostly. So therefore it's an act of hubris to buy a stock. What you're saying is, we've got it right, and those thousands of people that are setting the price on Qualcomm (QCOM) or Morgan Stanley (MS), they have got it wrong. We don't think that that act of hubris will pay off that frequently. We have a concentrated portfolio. We own right now 17 stocks in our large-cap value product.

Our average holding period is two to three years. So we might buy or sell a third of those names a year. We have actually two products, the large-cap value one is the one that goes all the way back to 1999 when we started the firm; and then in response really to the 2008 crisis, we started what we call the high-income equity portfolio. We like to be contrarian, but at the same time we need to deliver what our clients need and want.

Everyone was shouting for a high dividend, safe equity products after the financial crisis. There are a lot of high-dividend funds out there, but all of them seem to us to hold stocks like Johnson and Johnson (JNJ) and Wal-Mart (WMT) and Exxon (XOM), which are wonderful companies but slow growth stocks. The stocks weren't particularly cheap. We wanted to offer our clients the same kind of portfolio statistics - a high dividend, a low beta and equity exposure - but without having to have slower, no-growth stocks.

We created a portfolio that's 30% preferred stocks that yield 6%, 7% and then we have 70% sexier value stocks. For example, we're 10% in refining right now, which you wouldn't see in a typical dividend portfolio. We have the financials, we have Qualcomm and other smartphone-technology stocks. That product was up 18.8% last year net of fees and...

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.

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