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Three money managers examine portfolio management strategies in the latest Issue of The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info581.htm

TWST: What is your investment philosophy at Oppenheimer Capital?

Mr. Degenhart: We manage over $400 million within the small cap area. About 75% of our assets are for variable annuity plans within life insurance companies. Our accounts include the OCC Accumulation Trust (a commingled product currently offered by 12 insurance companies) and Sun Capital Value. The remaining assets are for ERISA and WRAP accounts. In our mid-cap group, I also work closely with Gary Chin, a Senior Analyst here. It’s a big universe out there, so we try to be very efficient. We narrow the universe down by focusing on two things when we look at a company. First, there’s what we call franchise value, companies that have some sort of value-added aspect to them. They sell to niche markets and have leading market shares, high barriers to entry, sustainable profitability, or an attractive competitive environment. Those characteristics can be found through screens where we look at profitability ratios and consistency. We also find strong franchise values by doing fundamental research, meeting companies at conferences and going to visit companies out in their offices when we travel around the country. After we have identified companies that we believe have franchise value, we add them to our watch list, track them, and wait for attractive entry points. Those attractive entry points might be triggered by an unfortunate event like 9/11. They might be triggered by sector-specific incidents that cause companies in the whole group to go down. In that case, we would try to buy the best company in that group. So we’re identifying the franchise value and then we’re looking to identify strong management teams. Those things often go hand in hand, but not always. In looking at management teams, we look for depth. We don’t typically want to see a one-man show; we like teams. We want depth, experience, a strong, consistent track record, low turnover of management, and a management team whose interests are aligned with shareholders, preferably through direct stock ownership and not all through options.

TWST: Are there any other companies that you want to mention to exemplify the diversity of your fund?

Mr. Degenhart: Another company that I would mention is Big Lots (NYSE:BLI), which is our largest position right now. And even at that, it’s a name that we have significant profits in already. The stock is currently at $18. They are a closeout retailer. They will buy items from OEM manufacturers at closeout and sell them at typically about a 40% savings to consumers. What we like about this company is that the person who had been CFO for a long time became CEO. He has made some other management changes. They’ve implemented a lot of new IT systems. Management has this financial target that they talk about, 8-2-3, which means, 8% operating margin, $2 in earnings per share and 3 times inventory returns, within fiscal 2004, 2005. We believe that those numbers might actually be conservative because those are numbers that the company has attained in the past, and with their new systems and new management, we believe they will actually be able to exceed those numbers over time. But even if you use those numbers as a starting point, putting a 15 multiple on $2 of earnings implies a $30 stock price, significantly above the current $18 that it currently trades at.

This special report includes:

1) Investing in Small Cap Value Stocks - Mark F. Degenhart, Senior Vice President for Oppenheimer Capital, examines portfolio management strategies in this timely and deeply informative 4,000-word interview from The Wall Street Transcript.

2) Mark Gorodinsky, a Portfolio Manager of the RSI Retirement Trust Emerging Growth Equity Fund with Retirement System Investors Inc., examines portfolio management strategies in this timely and deeply informative 2,400-word interview from The Wall Street Transcript.

3) H. Edward Shill II, Chief Investment Officer of QCI Asset Management, examines portfolio management strategies in this timely and deeply informative 2,800-word interview from The Wall Street Transcript.