Barron's Interview David Katz
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Date updated:05-11-2008

Barron's talked with David Katz, portfolio manager of Matrix Advisors Value Fund (MAVFX). In a recent report, Morningstar analyst Andrew Gunter wrote: "Katz has built this fund's top-decile, 10-year record versus large blend rivals -- an excellent accomplish- ment -- by sticking to bets in the face of much uncertainty. This fund remains a strong choice for long-term investors."

symbol name last price % change open
  • +
  • SPLS
    Staples
  • $23.64
  • -1.29%
  • $23.96

Staples, Katz argues, is the "best-in-its- class office superstore" and is navigating the economic slowdown better than Office Max (OMX) or Office Depot. The fund manager believes that Staples will earn $1.69 in 2009, versus an expected $1.52 this year. Staples is trying to buy Amsterdam-based Corporate Express. If the deal bears fruit, it would add to Staples' global reach and could help its stock, recently at 22, climb to 31 in a year, he says.

People owning SPLS also tend to own: AUYBPCSEKEYLMTLUNAPEG

TheStreet.com Rating: B- What is this?

  • +
  • WMT
    Wal Mart Stores
  • $54.44
  • -0.24%
  • $54.73

"Long-term successful managers make their mark during rotating, inflecting or turbulent markets, such as we have recently gone through," says Katz. Given the current market atmosphere, he believes the best areas for investors are "mega-cap stocks" (with market capitalizations of $40 billion-plus in technology, financial services, cable and select retail sectors. This includes names like Staples (SPLS), Wal-Mart, Time Warner (TWX), McGraw-Hill (MHP) and Cisco Systems (CSCO).

People owning WMT also tend to own: ABTDGXEPDFMDGSKJNJJOSB

TheStreet.com Rating: B What is this?

  • +
  • TWX
    Time Warner Inc N
  • $31.11
  • +0.68%
  • $31.01

"Long-term successful managers make their mark during rotating, inflecting or turbulent markets, such as we have recently gone through," says Katz. Given the current market atmosphere, he believes the best areas for investors are "mega-cap stocks" (with market capitalizations of $40 billion-plus in technology, financial services, cable and select retail sectors. This includes names like Staples (SPLS), Wal-Mart, Time Warner (TWX), McGraw-Hill (MHP) and Cisco Systems (CSCO).

People owning TWX also tend to own: CBSDISGOOGNWSVIAYHOODENN

TheStreet.com Rating: D+ What is this?

  • +
  • MHP
    Mcgraw Hill Cos T
  • $30.06
  • -0.92%
  • $30.41

He also likes McGraw-Hill, which he view as a terrific long-term bet and which he thinks can jump to 69 in a year; it recently traded around 40.

People owning MHP also tend to own: MCOMNSTACASALDALLBACGE

TheStreet.com Rating: C+ What is this?

  • +
  • CSCO
    Cisco Systems
  • $23.83
  • -0.17%
  • $23.97

Atop his buy list: Cisco Systems, which makes Internet routers and other wireless devices and which he considers "a premier growth company." Its shares historically have sold for more than 20 times earnings, but at a recent quote of 26, were fetching only 15 times expected 2009 net. Katz believes its fair value is 34.50.

People owning CSCO also tend to own: AAPLAMDDELLGOOGIBMINTCMSFT

TheStreet.com Rating: B- What is this?

  • +
  • MER
    11.88
  • $11.78
  • 0.00
  • $11.78

He's very bullish on financials, including Morgan Stanley, Merrill Lynch (MER) and American International Group (AIG), all of which, he predicts, "are going to act better sooner than later."

People owning MER also tend to own: AIGALLAXPBACBRK-BCCOF

TheStreet.com Rating: No Rating What is this?

  • +
  • AIG
    Amer Intl Group N
  • $29.89
  • -4.17%
  • $31.29

He's very bullish on financials, including Morgan Stanley, Merrill Lynch (MER) and American International Group (AIG), all of which, he predicts, "are going to act better sooner than later."

People owning AIG also tend to own: AAIBMINTCJNJJPMKOMSFT

TheStreet.com Rating: D- What is this?

  • +
  • MS
    Morgan Stanley
  • $30.20
  • -1.31%
  • $30.91

Morgan, he notes, recently enjoyed a better-than-expected quarter, with a return on equity of 20%. At a recent price of 49, it was trading at 8.8 times forward earnings and 7.5 times 2009's consensus net. "The company is selling at the lower end of price-book valuations," he adds. (About 1.57, versus its historical average of 2.15). Katz believes the shares can go as high as 75 in 12 months.

People owning MS also tend to own: AIGBACCPWRDISFWLTGS

TheStreet.com Rating: No Rating What is this?

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