TWST Newsletter

Give us your email address and receive the TWST Newsletter.


Subscribe to TWST

The Wall Street Transcript is a completely unique resource for investors and business researchers. Thousands of in-depth interviews with CEOs, Industry Analysts and Professional Money Managers going back 10 years.

To obtain a copy of a TWST issue/report order online or call (212) 952-7433 .

SUBSCRIBE

Search TWST Online

Search by ticker:
or Sector:
Search by keyword:

10% To 15% Growth Predicted For BOTOX; Allergan (AGN) Viewed As A Great Performer By Money Manager

August 9, 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.

View Details of This Special Report

Recent Wall Street Transcript Special Reports.

Lambros Piscopos is Senior Vice President of Global Equities and is responsible for implementing and overseeing the firm's global equity investment strategy. He is also lead manager of the firm's global product offerings. As a senior member of the company's executive team, Mr. Piscopos sits on Natcan's executive management and asset allocation committees. Prior to joining Natcan in 2004, Lambros spent 3 years with Investors Group Investment Management as partner and portfolio manager managing U.S. and global equity mandates.

TWST: Do you have an investment style that you follow?

Mr. Piscopos: Yes, we are fundamentally-driven, bottom-up stock pickers. We do use some quantitative overlays, but it's really a bottom-up, fundamental approach. We like to say that our focus is on quality, so quality at a reasonable price if you want to call it. If you look at our portfolio, we think of quality companies as those that possess stable and persistent earnings growth, expanding and above-average profit margins and high returns on capital; it's kind of the way our portfolio tilts.

TWST: What are the weightings or exposure that you have geographically in your Global Focused Fund at this time?

Mr. Piscopos: We have healthy overweights in the US and Hong Kong and underexposures to Japan obviously and Europe. In terms of the larger developed markets, we favour the U.S. and Hong Kong has been our way to play the emerging growth coming out of China. We're overexposed to that market through some companies that we think give us an attractive way to access the considerable growth potential there.

TWST: Have you been making any changes to the fund's composition over the past 12 months?

Mr. Piscopos: Yes. The markets have changed a lot in the past 12 months. We are long-term investors however the volatility of the past two years has meant that we've had to be a bit more nimble than usual. That said, performance has been good, we outperformed the market during the severe correction in 2008, yet we were also able to participate and outperform when the market rebounded as we tilted the portfolio towards some of the more attractive valuation opportunities that were available at that time. I'd say today we've kind of reverted back and taken a slightly more cautious stand, so we're once again overweight in areas such as consumer staples and health care, and underweight for example financials quite dramatically.

TWST: What are some of the holdings that you have in the fund that you feel are representative of your approach and the reasons why you found them attractive?

Mr. Nightingale: Hengan (1044) is a Hong Kong listed company with the vast majority of its operations in China. It has three main lines of business; tissue paper, diapers and sanitary napkins. In those three markets, it's either the Number 1 or Number 2 across China. From a quantitative point of view it ticks all the boxes that we look for in terms of high returns on capital, high margins, solid growth, and the company's strong discipline with regards to returning capital to shareholders via dividend. From a strategic point of view, it fits as well.

It competes with the roughly 5,000 domestic competitors on the basis of the quality of the product and it competes with the international competitors via its distribution system, which is unmatched in its space. They have distribution much deeper into China than any of the international peers. The manufacturing footprint, which is also deeper into China, gives them a considerable cost advantage versus some of its larger international competitors. All of that, in the context of adoption rates for these products that remain relatively low and the stickiness of the products. When you start using diapers or sanitary napkins, you don't want to go back to using whatever it was you were using before.

TWST: Any other companies that you wanted to illustrate?

Mr. Piscopos: I'll talk a bit about Allergan (AGN). Allergan is a specialty pharmaceutical company focused on ophthamology and aesthetics. Now health care has been a very difficult place to make money in the past five years, but this stock has been a great performer for us. The company possesses one of the strongest and highest profile products in the specialty pharmaceutical market in BOTOX which should continue to expand at 10 to 15% from new medical indications (migraine and overactive bladder) and cosmetic expansion.

In addition Allergan has a highly defensive business model as 60% of its earnings (cosmetic Botox, dermal fillers, silicon breast implants, Lap-Band for obesity as well as some ancillary products) are largely paid for out of pocket limiting its reimbursement risk. The nice thing about the aesthetics business is that it is relatively sticky. People would think it is cyclical and economically exposed, but the reality is it's a very high-end market and that type of spend tends to be relatively unaffected by small downturns in the economy.

The remainder of this 17 page TWST Investing Strategies Report can be immediately viewed by purchasing online.


The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.

For Information on subscribing to The Wall Street Transcript, please call 800/246-7673