CHICAGO -- Want relative safety and growth? Invest in U.S.
large caps and in emerging market names.
That's what several leading money managers at the Morningstar
Investment Conference said they are doing. In a world that looks
increasingly unappetizing to investors, that's where they're
finding new opportunities.
Guy Pope, a manager of $3 billion Columbia Value &
Restructuring Fund , said he finds several U.S. financials
attractive. And despite criticism ofJPMorgan Chase (
) by some politicians, Pope said he still likes that company. Its
chairman, president and CEO, James Dimon, is still "one of the
best executives out there," he said.
And when interest rates finally do rise, it will boost margins
for financials, Pope said.
Pope, who has been a helmsman of Value & Restructuring
since 2009, was speaking on a Thursday panel featuring new
managers on well established funds.
Pope also said he is finding valuations reasonable in tech
names. In addition, many tech leaders have very strong balance
Sharing similar thoughts, fellow panelist Matthew McLennan
said he has invested in software names likeMicrosoft (
) andOracle (
Both companies have been the subjects of controversy, McLennan
said. But both get a lot of their earnings from recurring
That stability and visibility make them very attractive when
the market is increasingly unpredictable, he added.
"Whilst many segments of technology are volatile, these are
stable," said McLennan, who grew up in and was educated in
Microsoft and Oracle's revenue stability makes them look
) andProcter & Gamble (
). That resemblance to him is reinforced by their price-earnings
ratios. At 11 they are lower than the cosmetics-personal care
giants' 19 and 16, making the tech names more attractively
In Asia, McLennan said he likes some names in Japan. "After a
20-year bear market, there are some tremendous opportunities for
value investors," he said.
McLennan succeeded Jean-Marie Eveillard at the helm of three
First Eagle funds in 2009.
Panelist Ian Lapey, successor to Marty Whitman at the helm of
$2.7 billion Third Avenue Value in February, likes several Hong
Kong-based real estate companies that invest in China. The
companies include Henderson Land Development, Wheelock and Cheung
Henderson's chairman spent $1.8 billion in 2011 buying shares
in his company at an average price of 55, Lapey said. So he
thought it was a bargain at that price, Lapey added, and now it
is trading around 41. "So you can get it now at a huge discount
to what the person who knows it best thought it was worth not
long ago," he said.
Lapey added that those companies' growth prospects remain
bright despite China's slowdown in GDP growth.
The three managers said they are generally not making big
changes in the funds they have taken over.
Lapey said he is controlling risk by reducing weightings in
his top 10 holdings. As of March 1 they accounted for 70% of fund
assets. Now they are down to 61%. And individual positions that
were more than 10% weightings have been trimmed.