Barron's Interview Ronald Sloan
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Date updated:09-20-2008

Talking with Ronald Sloan, Lead Portfolio Manager, AIM Mid-Cap Core Equity Fund. Over the past year through September 17, his $1.8 billion AIM Mid-Cap Core Equity Fund (GTAGX) was down 2.99% while the market suffered more than a 20% loss. That put him in the top 4% of all equity funds and the top 2% of his mid-cap fund peers.

symbol name last price % change open
  • +
  • LM
    Legg Mason Inc
  • $25.35
  • +7.60%
  • $23.91

Asiello and Nelson saw the collapse of Legg Mason 's (LM) shares over the past two years, creating a compelling buy. But Sloan was skeptical, as he is with most financials. His co-managers, however, were far more confident about the stock, which by the spring was selling at a ratio of enterprise value to assets under management of just 0.60% (enterprise value is market capitalization plus net debt). "That was nearly a three-quarters discount to the rest of an already beaten-down industry average of 2.25%," says Asiello, who saw this as adequate cover for Legg's potentially troubled structured-investment-vehicle liabilities, client outflows and the performance problems of its once-star portfolio manager, Bill Miller. With $920 billion of assets under management, Legg remains a major, highly respected, well-managed industry player. And it has unrealized synergies, say Asiello and Nelson, from the swap that gave it Citigroup's asset-management business and its acquisition of hedge-fund manager Permal Group. So far, Legg has traded off more than 30% from the fund's average cost of more than $54. But the group hasn't blinked, still believing in its two-year price target of $86.

People owning LM also tend to own: ARCCNDAQCBHCKFRDGXDKSGD

TheStreet.com Rating: D What is this?

  • +
  • FTI
    Fmc Technologies
  • $28.71
  • +8.54%
  • $27.00

The investment in the Baltimore-based asset manager reflects a significant rebalancing out of the fund's profitable energy exposure -- which had peaked at 15% early this year, and included FMC Technologies (FTI), Noble (NE), and Smith International (SII) -- into financials. Since the spring, Sloan also has added People's United Financia l (PBCT), Moody's Investor Service (MCO) and Progressive (PGR) as part of boosting his weighting in financials from 5% to 15%.

People owning FTI also tend to own: AAPLALJLINEABXAEMAGUAUY

TheStreet.com Rating: C+ What is this?

  • +
  • NE
    Noble Corp
  • $25.47
  • +2.99%
  • $24.98

The investment in the Baltimore-based asset manager reflects a significant rebalancing out of the fund's profitable energy exposure -- which had peaked at 15% early this year, and included FMC Technologies (FTI), Noble (NE), and Smith International (SII) -- into financials. Since the spring, Sloan also has added People's United Financia l (PBCT), Moody's Investor Service (MCO) and Progressive (PGR) as part of boosting his weighting in financials from 5% to 15%.

People owning NE also tend to own: AETAIGBRK-BCAGCATCBICHL

TheStreet.com Rating: C What is this?

  • +
  • SII
    Smith Intl Inc
  • $28.84
  • +7.57%
  • $27.35

The investment in the Baltimore-based asset manager reflects a significant rebalancing out of the fund's profitable energy exposure -- which had peaked at 15% early this year, and included FMC Technologies (FTI), Noble (NE), and Smith International (SII) -- into financials. Since the spring, Sloan also has added People's United Financia l (PBCT), Moody's Investor Service (MCO) and Progressive (PGR) as part of boosting his weighting in financials from 5% to 15%.

People owning SII also tend to own: APCATWCYESVHOCIOCMM

TheStreet.com Rating: C+ What is this?

  • +
  • PBCT
    People's United F
  • $17.06
  • -1.27%
  • $17.48

The investment in the Baltimore-based asset manager reflects a significant rebalancing out of the fund's profitable energy exposure -- which had peaked at 15% early this year, and included FMC Technologies (FTI), Noble (NE), and Smith International (SII) -- into financials. Since the spring, Sloan also has added People's United Financia l (PBCT), Moody's Investor Service (MCO) and Progressive (PGR) as part of boosting his weighting in financials from 5% to 15%.

People owning PBCT also tend to own: MOVTRCSECVXDDEODRE

TheStreet.com Rating: B+ What is this?

  • +
  • MCO
    Moody's Corp
  • $22.98
  • +3.65%
  • $22.40

The investment in the Baltimore-based asset manager reflects a significant rebalancing out of the fund's profitable energy exposure -- which had peaked at 15% early this year, and included FMC Technologies (FTI), Noble (NE), and Smith International (SII) -- into financials. Since the spring, Sloan also has added People's United Financia l (PBCT), Moody's Investor Service (MCO) and Progressive (PGR) as part of boosting his weighting in financials from 5% to 15%.

People owning MCO also tend to own: CMECVSDELLEBAYGEGSLEH

TheStreet.com Rating: D What is this?

  • +
  • PGR
    Progressive Cp
  • $14.98
  • +0.20%
  • $14.95

The investment in the Baltimore-based asset manager reflects a significant rebalancing out of the fund's profitable energy exposure -- which had peaked at 15% early this year, and included FMC Technologies (FTI), Noble (NE), and Smith International (SII) -- into financials. Since the spring, Sloan also has added People's United Financia l (PBCT), Moody's Investor Service (MCO) and Progressive (PGR) as part of boosting his weighting in financials from 5% to 15%.

People owning PGR also tend to own: ASHATGBACCBMNINFBNI

TheStreet.com Rating: C- What is this?

  • +
  • ZMH
    Zimmer Holdings I
  • $41.66
  • +1.86%
  • $41.57

Last fall, the fund pounced on Zimmer Holdings (ZMH), a leading maker of orthopedic implants and surgical products, establishing a 1.50% stake, when a perfect storm hit. Management had just announced slowing growth across its portfolio. This had followed the departure of the CEO and CFO, in settling a case that accused the company of having paid surgeons to use its products, and lower-than-expected currency gains from international sales. The result: The stock fell from $77 to $66 in one day. But Sloan felt none of the news altered the company's longer-term outlook. "We were still looking at 33% operating margins, return on invested capital of 16%, and a $1 billion share buyback that's now half realized," says Sloan, "but a 2008 PE of 15 instead of 18, which is where we think it should be." His average cost is $66. The stock was trading at $68 on Friday. And Sloan sees it heading to $85.

People owning ZMH also tend to own: APSGCYTRADXMSRAAPLAATICAT

TheStreet.com Rating: C What is this?

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