Who doesn’t love a bargain? Scoring something sought-after at a discount can be as thrilling for shoppers on Main Street as deal-hunters on Wall Street. Ferreting out finds takes time, though, and not everyone has the patience—or the resources—to do that legwork. But Katrina Dudley, portfolio manager with Mutual Series® , is a savvy stock shopper with ample amounts of both. Read on for a taste of her stock-picking approach as inspired by the Mutual Series’ guiding principle: “buy a dollar’s worth of assets at a discount.”
- Macro considerations are important, but they don’t change our stock-by-stock selection process
- Volatility is here to stay, but it can create opportunity
- We’re looking at the company-level impact of macro influences like eurozone austerity
- Many European companies are readjusting their cost base, becoming more competitive Read more…
Jerry Palmieri, Vice President and Sr. Portfolio Manager for Franklin Equity Group, doesn’t worry too much about whether the Greek drama dominating daily headlines will turn into global market tragedy. A veteran of Franklin Templeton since 1965, he’s survived to tell the tale after more than four decades of market ups and downs. His wizened view summarized:
- Market ups and downs are to be expected.
- U.S. market, economy will survive the Greek debt crisis. ”Things will work out.”
- Market timing not the ticket to long-term investing success.
Ups and Downs Are To Be Expected
On “Black Monday,” October 19, 1987, the Dow Jones Industrial Average plunged more than 508 points, or roughly 22%.1 Following the market plunge, Palmieri, a longtime fund manager, earned the respect of his peers for his calm demeanor and diligence during a time few market veterans could ever forget. During one of the worst crashes in the history of the market, Palmieri maintained his resolve that despite the crash, the equity market was still the place for investors to be over the long-term.
Value, like beauty, is in the eye of the beholder. One man’s splurge is another man’s thrift. So how do you define value? And where do you find it? Alan Chua, portfolio manager with the Templeton Global Equity Group and known value-hunter, has been spanning the globe to uncover it. You might be surprised to learn that the much-maligned eurozone, embroiled in an ongoing debt crisis, also happens to be a place he feels attractive valuations are ripe for the plucking. Top takeaways:
- Chua sees “attractive opportunities” in the eurozone, based on valuations
- Sectors to watch: pharmaceuticals and technology
- Opportunities in Asia
- Chua remains cautious on the U.S., as valuations there are not as cheap as Europe, but there are promising signs Read more…
Every now and again we get the opportunity for a more a personal chat with one of the portfolio managers here. The opportunity recently arose again, this time with Bill Lippman: a Bronx native, tennis fanatic, and, by the way, CIO for the US Value, Franklin Equity Group. With 60-odd years in the business the always charismatic Mr. Lippman certainly can share some memorable stories. Read on…
On How He Got Into Asset Management
As a young man out of college, I was running a sales organization. It had nothing to do with the financial services industry, although I did graduate with an MBA that focused on finance. These were tough times back then, and one of our best salesman made an incredible commission that year – this was amazing – $30,000. Can you imagine such a huge amount!
He quit that year, and I called him back in and I said: “I’m just curious. You made $30,000 here this year, which was outstanding. Everyone else made $15,000 if they were lucky. Where are you going?” He said, “I’m going to work for a mutual fund organization.” I said, “You really think you’re going to make more money there than here?” He said, “Yes!”
Every now and then we get an opportunity to have a fireside chat of sorts with the people behind the Portfolio Manager title. A few months ago we met with Lisa Myers of Templeton Global Equity Group, and this week we had a similar up-close and personal chat with Peter Langerman, chairman, president, and CEO of Franklin Templeton’s Mutual Series, the New Jersey-based deep value investing group.
On His Pre-Investment Life
“I had a variety of interesting summer jobs when I was in college. Among them, I worked on a ranch one summer in Montana. It was a pretty solitary existence but it taught me a lot. I had a bunch of responsibilities which I had no experience doing prior to that time. I learned a lot about individual responsibility. Some of these lessons shaped how I do things even today.”
At a time when some believe that government bond yields are hitting the proverbial rock bottom and stock market volatility is more than many can stomach, where can an income-oriented investor turn? In a word: dividends.
In a low growth climate, high-quality dividend-paying stocks offer distinct attributes that make them a compelling antidote for wary investors. Alan Muschott, portfolio manager with Franklin Templeton’s equity group, explains how these attributes can help dividend-paying stocks outperform in grueling markets and what he looks for when picking companies:
“Nobody says they invest in low-quality stocks, right? Everybody says they invest in high-quality stocks. So what we really want to do is elaborate on what that means to us. The strength of what we do is in our research team and what most of their time is spent doing is really determining the quality of the company by looking at it from three different points of view.”
For many of us, our experience with the utilities industry is limited to a passing admiration of electricity grids and gratefulness that our running water and power work as they should. But for portfolio manager, John Kohli, who specializes in domestic and international equity research analysis of utilities for the Franklin Equity Group, utilities run his daily life –literally and figuratively. In the excerpted conversation below, he’ll help us explore recent dynamics in the industry.
On Utilities Regulation:
Thanks to deregulation, Kohli says some utilities have “stretched” the definition of a utility company. While this presents an interesting opportunity for the company to diversify, investors may not be buying into what they thought. When is a utility not a utility company? When it’s a utility/international telecommunications company.
Another wrinkle in the utilities space is that regulatory environments vary widely between jurisdictions. As Kohli notes:
“We like to have a high level of comfort in the regulatory environment…When you venture outside the U.S. you start to lose some of that perspective on what’s going on from a regulatory policy perspective. A classic example is with the recent Euro situation. We have seen some countries in Europe who have gone away from their traditional regulatory constructs in order to stimulate growth in their economy. Italy just instituted what they’re referring locally to as a “Robin Hood tax” where they’re taxing the utilities higher than they have historically, and that’s led to significant volatility in some of those companies.”