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TWST: What do you look for when you're determining which companies you're going to include in your coverage? What are the criteria that separate out the successful merchants from the rest?

Mr. Ikenson: I obviously look at merchants in terms of my criteria for picking up a company for potential coverage. I look at demographics, so I take a top-down approach and a bottom-up approach. I try to do it both ways.

From the bottom-up, I try to determine whether a company is doing something differently or attacking a segment of the market somewhat differently, or has what I think is an advantage.

TWST: We should talk about the department stores you follow, Saks (NYSE:SKS) and Nordstrom (NYSE:JWN).

Mr. Ikenson: Nordstrom really focuses more on apparel, so it's large enough to be a department store, yet it's a department store with many specialized departments in it. That's the way I would characterize it. Nordstrom has been going through changes for some time now in order to reorganize itself to be more efficient, be more flexible, act more quickly on their acquisition of fashion product, and manage inventory better. And we believe that they have made great strides in doing that.

TWST: Is Nordstrom a stock to buy at this time?

Mr. Ikenson: Yes, we recently upgraded the stock to a buy from a Market Perform based on our increased confidence in the merchandise and look of stores. Also, on valuation, JWN's p/e multiple relative to the S&P Industrials Index is currently close to the lowest relative p/e since 1994, which further make the shares a compelling value.