Paul Ehrlichman is the Head of Global Value at ClearBridge Investments and co-manages numerous global and international strategies. His exclusive interview with the Wall Street Transcript details his iconoclastic stock picking ability.
“We really look for that very rare combination — and we’ll talk about it in a second and show how rare it is — but that combination of very strong growth potential but completely not priced in. So we’re looking for deep undervaluation in situations that have substantial growth potential, and it produces what we call the gap, the gap between implied growth and expected growth. So for example, we have a value portfolio selling for about 12 or 13 times earnings, but it also has 20% earnings growth potential…”
One good example out of the many discussed by Mr. Ehrlichman in the interview is the financial firm Standard Life (LON:SL):
“…we like firms like Standard Life (LON:SL), merging with Aberdeen. So they have a lot of cost cutting. They’ve increased their scale dramatically. It’s selling at about 12 times, trough profits maybe eight or nine times sustainable profitability. They are a beneficiary of the emerging-market recovery because of lot of their mandates are emerging-market-based, and they also pay a 5% dividend yield.”
Read the rest of the exclusive interview on the Wall Street Transcript.
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