Ms. Kessler: Becker Capital Management was founded in 1976. We are an independent, employee-owned firm, managing approximately 2.5 billion in assets for institutions and individuals. The firm has embraced a fundamentally value philosophy since its inception and has not deviated from its strategy, even when it was enticing to do so, most notably in the late 1990s. Our large-cap product, our flagship strategy, includes both separately managed accounts and the Becker Value Equity Fund. The fund has a five-star Morningstar rating for three and five years, and totals just over a 100 million in assets. The large-cap product is team managed by four portfolio managers, Mike McGarr, Steve Laveson, Bob Schaeffer and me. We are bottom-up, fundamentally driven research analysts. The four team members are generalists and are supported by four additional sector-specific analysts.
TWST: What type and size of companies you invest in? What type of specific criteria do you look for in potential holdings?
Ms. Kessler: We invest in primarily large-cap stocks, over 10 billion in market capitalization. We do have flexibility to move down into the mid-cap area, but we maintain a greater-than-60% total portfolio exposure to large-cap stocks. Our median market cap is currently 17 billion, versus the R1000 Value, at 4 billion. We buy stocks that meet four primary criteria: First, the stock must be out of favor due to cyclical or temporary problems. We only purchase good, quality companies; we don't buy speculative stocks, distressed balance sheets or turnarounds. Our typical stock is selling at an attractive valuation, either to its historic norm, relative value or to the market as a whole, absolute value. Most importantly, where we believe we add long-term value, particularly in challenging or volatile markets, is our insistence on investing only in companies where we can identify stable-to-improving business trends, whether that be improving operating margins, sales, earnings or market share growth, or improving quality of earnings. Identifying specific company trends has been critical in helping us avoid the "value traps" the last couple of years.
Tickers included in this excerpt: BDX, BVEFX, COP, COV, CVX, DELL, DVN, FPL, GE, HMC, HP, HPQ, HRS, JPM, KO, MET, MRK, MS, MUR, PNC, PXD, RDS-A, SLB, STT, WFT
For more information call (212) 952 7433. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations.