Cognizant Technology (CTSH) Is Newest Addition To Logan Capitals Portfolio: What Are The Other Top Stock Picks?
February 3, 2010 - The Wall Street Transcript has just published TWST Investing Strategies Report offering a timely review of the General Investing sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
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Stephen S. Leeis a founder, portfolio manager and a member of the growth equity investment team for the firm. A graduate of Lehigh University with a BS degree in accounting, Stephen holds NASD Series 7, 24, 63 and 65 licenses. Before founding Logan Capital with his partners in 1993, Stephen was previously employed at Mercer Capital Management and Merrill Lynch. His involvement in the community includes serving on several Investment Committees and Foundation Boards, including the Investment Committee of The Pennsylvania Horticultural Society. He is also a trustee of The Gladwyne Montessori School.
Al Besse is a founder and portfolio manager for the firm, and serves as Logan Capital's President. As a member of the growth equity investment team he is responsible for the firm's technical analysis effort. Prior to joining Logan Capital, Al was a Vice President at First Fidelity Bank serving as co-manager of the Charitable Equity Fund. During his decade at the bank, he played a key role in the formation and development of First Fidelity's $2 billion Institutional Funds Management Group. In 1991 he was named as the bank's Institutional Investment Professional of the Year. Al is a graduate of Haverford College (BA) and The Wharton School of the University of Pennsylvania (MBA).
Dana H. Stewardson is a founder, portfolio manager and a member of the growth equity investment team for the firm. He has been in the investment business for twenty five years and has served his clients as a portfolio manager for several investment firms including Mercer Capital Management, Edward C. Rorer & Co. and Kidder, Peabody & Co. He serves on the boards of The Harriton Association, Bryn Mawr, The Wyck Association, Philadelphia, and as Chair of the Parents Council of The University of Pennsylvania. Dana is a graduate of Ohio Wesleyan University (BA) and is a member of The Financial Analysts of Philadelphia.
TWST: What are some of the opportunities that you have found during the last few months that you've been able to add to your portfolio and that you feel are representative of your investment approach?
Mr. Lee: Some of the more recent adds certainly did very well in the discretionaries and we've actually been taking some profits and trimming those positions fairly well. Some of the newer adds we're recently putting in are companies that will benefit as corporate spending begins to get back to normal, notably Cognizant Technology (CTSH), information technology outsourcing, as well as consulting. One of our overall themes is that we think there's a lot's been going on in terms of restructuring businesses, sometimes for good reasons, sometimes for less good reasons.
At the end of the day, we now have companies that need to really go through, figure out how they're going to operate on the going forward business and they're certainly going to be consistent, increasing pressure on managing costs and expenses which we think creates an ideal environment for IT outsourcing as well as the consulting in terms of making businesses run more efficiently. In addition, if you go out and look at what's really been going on in technology, there's a lot of talk now about "cloud computing." We had these positions a bit on the early side, companies like Citrix (CTXS), and Amazon, which benefits from renting out computers to its supplying outsourced computing-based service.
We think there are a lot of opportunities for businesses to really take advantage of technology and actually boost productivity and boost earnings. We're looking to add in that perspective. Those have been some of the newer adds that we've put in the portfolio. In addition, we think that as healthcare legislation comes to its conclusion, the uncertainty will move away, so, we recently added AmerisourceBergen (ABC), which is a distributor of healthcare products. But again, healthcare sector has companies like Medco Health (MHS) and Express Scripts (ESRX). We really believe that a lot of the return on the healthcare sector is going to be in stocks that can reduce the cost of delivering healthcare. Anything that happens on the legislative front will probably increase the number of participants in the healthcare system, so we own companies that will help reduce the cost. In terms of some of the best performers that we have, it was an interesting year in that some of the names that actually outperformed quite well were names that were somewhat tough companies to hold earlier in the year.
In terms of materials, we have Freeport-McMoran (FCX) and certainly copper is economically sensitive. For a while, at the beginning of last year a lot of commodities were really pricing in a dramatic slump in the economy and not really forecasting any sort of a recovery. We thought that period was a nice opportunity to maintain those positions. In addition, we have Priceline (PCLN) and two things happened there. They had expanded their hotel network overseas into Europe, but the hotels weren't really using it, they weren't getting any advantage out of it.
Well, the nice thing is when you have a slowdown in the economy, there are a lot of excess hotel rooms. Priceline had spent several years laying the groundwork so that when a lot of inventory became available, they got the benefit. Plus, we firmly believe that consumers will continue to bargain hunt and purchase things online. Priceline's network took years to build up so there really isn't any other entrant coming in that can replicate what they have. So, we thought that both sides of the equation are doing very well. That stock was up almost 200% since last year.
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