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>> VALUE INVESTORS ARE KNOWN FOR
PICKING UNLOVED AND
MISUNDERSTOOD STOCKS.
OUR NEXT GUEST HAS BEEN PICKING
UP MEGACAP WELL KNOWN NAMES.
TODD LOWENSTEIN HELPS MANAGE
ABOUT $20 MILLION FOR HIGH MARK
CAPITAL.
HE JOINS US FROM LOS ANGELES TO
TALK ABOUT THE MARKETS AND HIS
INVESTMENT STRATEGIES.
TODD, WELCOME.
LET ME TALK ABOUT THE GLOBAL
HEAD LANES THAT ARE DOMINATING
THE NEWS AND IMPACTING STOCKS.
WHAT IS YOUR TAKE ON IT AND HAS
IT CHANGED YOUR STRATEGY ANY?
>> NOT YET.
WE ARE A POLICEMAN-UP STOCK
PICK, IN THE STRATEGY SO THAT IS
OUR FOCUS.
WE ARE FOCUSING ON CORPORATE
EARNINGS AND THE STATE OF THE
ECONOMY.
THERE ARE HEAD WINDS THAT WE ARE
WATCHING WITH RESPECT TO HIGH
LEVELS OF INTEREST RATES,
GEOPOLITICAL RISKS AND OIL BEING
A DRAG.
BUT WE THINK THE ECONOMY HAS
PROVED RESILIENT RECENTLY AND WE
THINK IT WILL CONTINUE TO DO SO
AND CORPORATE EARNINGS WILL GROW
AT A PRETTY STEADY CLIP AND
ULTIMATELY THE MARKET WILL START
TO PAY ATTENTION TO THAT AND
REVALUE THE MARKET ACCORDINGLY.
>> BUT CAN THE ECONOMY REALLY DO
THAT?
TODAY G.E.'S C.E.O. SAID THE
COMMODITY PRICES AND INTEREST
RATES ARE HEAD WINDS FOR THE
COMPANY.
YOU ARE TALKING ABOUT BELLWETHER
COMPANY.
SO WHAT DOES THAT MEAN FOR SOME
OF THE OTHER COMPANIES?
>> CLEARLY COMPANIES ARE
ATTEMPTING TO PERSIST THROUGH
SOME OF THE HIGHER MATERIAL
COSTS.
SOME MORE SUCCESSFUL THAN
OTHERS.
PRODUCTIVITY IS GOING TO DRIVE
DOWN SOME OF THESE UNIT LABOR
COSTS THAT WE ARE SEEING.
AND COMPANIES NEED A LOT OF
LEVERS.
THEY NEED TO FOCUS ON PROUMPT
AND ENHANCING THE BOTTOM LEAN.
BUT WE THINK THERE'S
ADAPTABILITY IN THE ECONOMY AND
OTHER SECTORS WILL PICK UP THE
SLACK.
WE THINK THERE'S AN IMPENDING
CAPITAL SPENDING CYCLE THAT WILL
OCCUR AND IS CONTINUING TO OCCUR
AND FOR THE MOST PART THE
ECONOMY IS PRETTY RESILIENT.
>> WHAT SECTORS TO YOU THINK
WILL PICK UP THE SLACK?
>> WE ARE OVERWEIGHTED IN
INDUSTRIALS, MATERIALS AND
ENERGY AND WE TILL THINK THE
ECONOMY IS GROWING AT STEADY BUT
NOT SPECTACULAR RATE WITH MODEST
INFLATION.
RECENT NUMBERS HAVE SHOWN MAYBE
THAT IS IN QUESTION.
BUT WE ARE NOT QUITE IN THE CAMP
OF A RECONCESSION.
THERE'S A POTENTIAL FOR A MID
CYCLE SLOWDOWN BUT WE THINK THIS
IS OPERATING LEVERAGE IN THAT'S
COMPANIES AND ESTIMATES ARE
ACHIEVABLE GOING FORWARD.
>> WE SAID G.E. IS ONE OF YOUR
TOP HOLDINGS AND IS NEAR A 52
-WEEK LOW.
WHAT DO DO YOU?
HAVE YOU ADDED OR HAVE YOU SOLD
THEIR SHARES CONSIDERING WHAT
YOU WERE SEEING IN THE STOCK?
>> NO, WE ARE PATIENT LONG-TERM
INVESTORS AND WE FOCUS ON THE
BUSINESS BEHIND THE STOCK.
WE LIKE G.E.
IT REPRESENTS ONE OF THESE
UNLOVED MISUNDERSTOOD COMPANIES.
THEY HAVE REPOSITIONED THEIR
PERTINENT TO CAPTURE HIGHER
GROWTH OPPORTUNITIES AND IT WILL
TAKE TIME BECAUSE THEY
TRANSITION AS THEY SHED SLOWER
GROWTH BUSINESSES BUT INVESTORS
ARE WILLING TO BE PATIENT AND
LOOK BEYOND THE CURRENT NOISE WE
THINK IF YOU LOOK BACK THREE TO
FIVE YEARS FROM NOW YOU WILL BE
GLAD YOU OWNED IT.
IT IS DOMINANT IN THE MARKETS
THEY ARE IN AND WE THINK IT WILL
PERFORM WELL GOING FORWARD.
>> ANOTHER ONE THAT I WOULD SAY
I GUESS IS A CON TRARN PLAY IS
WAL-MART BECAUSE IT IS HAVING A
TOUGH GO, HIGHER GAS PRICES AS
WELL IMPACTING THE RETAILERS AND
THUS WAL-MART.
THAT STOCK IS NEAR ITS SEPTEMBER
LOW.
SO IS THIS AN ENTRY POINT IN
TERMS OF WAL-MART?
>> IT IS A RELATIVELY NEW NAME
FOR US.
WE HAVE NOT OWNED IT IN THE
PAST.
WE HAVE BEEN ACCUMULATING IT
OVER TIME.
WE SEE A DOMINANT RETAILER AND
THE CURRENT ENVIRONMENT HAS NOT
YET DERAILED THE THIEVES ON --
THESIS ON THE COMPANY .
WE BELIEVE IT HAS A POTENTIAL TO
IN EUROPE AND ASIA.
AND WE THINK IT HAS
OPPORTUNITIES HERE IN THE U.S.
THEY ARE UPGRID BEING
MERCHANDISING INITIATIVES AND
FOCUSED ON RETURN ON CAPITAL.
WE ALSO LIKE THE FACT THAT WE
THINK THERE'S AN EMBEDDED OPTION
IN TERMS OF THEIR MIGRATION IT
FINANCIAL SERVICES.
THEY OFFER A LIMITED TERM IN THE
FORM OF CHECK CASHING AND OTHER
THINGS BUT AS THEY APPLY FOR A
PANIC CHARTER THEY CAN PROCESS
THEIR OWN CREDIT AND DEBIT CARD
TRANSACTIONS AND POTENTIALLY
TAKE DEPOSITS AND THAT COULD BE
A HUGE GROWTH VEHICLE.
>> THANK YOU, TODD LOWENSTEIN.
WE WILL CONTINUE TO TRACK THIS
MARKET FOUR INTO THE CLOSE OF
BUSINESS.
IT IS A FRIDAY.
WE HAVE SEEN THE DOW, S&P AND
NASDAQ BUMPING ALONG THE LOWS OF
THE SESSION NOW.
JUST ABOUT 16 MINUTES LEFT IN
TRADING.
WE WILL HAVE MORE ON TODAY'S
MARKETS NEXT ON MARKET MOVERS.