February 13, 2008
Our 5 picks this week come from Bruce Geller, portfolio manager at Dalton, Greiner, Hartman, Maher & Co. The company is a small cap value investor, and has interesting ideas on where the picks are these days:
- TJX (TJX)– “TJX owns several underlying retail chains. The ones that are most popular are T.J. Maxx and Marshalls…Basically this company has been able to capitalize on a lot of the problems in the retail and apparel sectors, because as an off-price retailer, T.J. Maxx goes and buys the excess production runs and inventory that other players have too much of — T.J. is able to go in and buy high quality brand name merchandise at a substantial discount to take it off the hands of these other players. They can then go and sell that merchandise to their customer base at a very attractive price, a much lower price than their customers would be paying in the department stores or at other specialty retailers.”
- Bed Bath and Beyond (BBBY)- “Considering the significant slowdown in home turnover, a lot of the products they sell play into this market, but this is without a doubt the premier player in that business, and I think they are going to be able to capitalize on the weakness we are seeing at some of their competitors.”
- Brinker (EAT)- “Chili’s is their flagship chain. They also own Macaroni Grill, On The Border Mexican Grill and Maggiano’s, which is a higher end Italian concept. And what I like about Brinker is that the management team has been very aggressive in monetizing fixed assets and using that cash flow to benefit shareholders. They have initiated a very substantial share repurchase program. I believe they bought back over 15% of their shares outstanding in the past 12 months, and I think that they will continue to do that. “
- 3M (MMM)– “It is really a very well diversified company. We all use a lot of their products all day long without even realizing it. It is an extremely high quality company. They probably have among the highest returns on assets of any industrial company out there, and they have been doing it forever. It is really attributed to how well the businesses are run and also to the incredible R&D effort that the company has. It has always been one of the most innovative companies in the US, and they continue to roll out many new products and receive patents on a significant number of new products across their different businesses every year.”
- AptarGroup (ATR)- “This is a company that makes dispensing equipment and closures. They also have over 50% of their sales that are outside of the US. And they also have some markets that will perform better in a cyclical downturn because a lot of it is healthcare and personal care related, which are less cyclical than your traditional industrial markets. So Aptar is another stock that I like for a more defensive type of a play.”
For the complete interview with Mr. Geller, detailing his investment philosophy in full and talking a little bit more about the outlook for 2008, click here.
