67 WALL STREET, New York - March 5, 2013 - The Wall Street Transcript has just published its Large Cap Value Report. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Value Investing - Long-Term Investing - Bottom-up Investing - Global Investing - High Quality Companies - Investment Strategies - Large Cap Investing
Companies include: Bank of America Corporation (BAC), Citigroup, Inc. (C), Hewlett-Packard Company (HPQ), International Business Machine (IBM), Corning Inc. (GLW), Marvell Technology Group Ltd. (MRVL), DeVry, Inc. (DV), Apollo Group Inc. (APOL), Dell Inc. (DELL) and many more.
In the following excerpt from the Large Cap Value Report, an expert portfolio manager discusses his investment strategy and some of this top picks.
TWST: Tell me about some of your specific picks right now and why you like them.
Mr. Lysik: I think some of the leading companies in the financial sector provide great long-term investment opportunities. During the market dislocation of 2008-2009, the financial sector saw significant financial stress as near-term profitability was impacted by increasing reserves, rising chargeoffs, weaker loan growth and net interest margin compression.
In addition, an accounting change accelerated asset write-downs, increasing the cyclicality of the sector. The industry went through a series of valuation multiple compressions, from a multiple of earnings to book value to tangible book value to a discount of tangible book value, as the marketplace became concerned on with liquidity and potential dilutive capital raises.
Now we are seeing the opposite take place for the industry. Capital levels have been restored, asset quality trends continue to improve, loan growth is accelerating, net interest margins are starting to stabilize and companies are aggressively adjusting their cost structures to match the lower-revenue environment. With the headwinds shifting to tailwinds, the financial sector earnings should continue to surprise the marketplace and move towards normalized earnings power over the next couple of years.
Over the past 12 months, financial company stock prices have started moving higher in some cases from deep discounts to liquidation value up to tangible book value. While the marketplace may continue to experience short-term worries over the European financial system we believe the revaluation process still has a long way to go to get from tangible book to the appropriate multiple of book value and normalized earnings.
Two opportunities within the sector today would be Bank of America (BAC) and Citigroup (C). Bank of America has the largest...
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