Barron's Interview Sound Shore Management
1732 views
Rate Now: 1 2 3 4

average rating: 0.00 / 0 ratings
Created by barrons3
DESCRIPTION:

Date updated:10-11-2008

The current maelstrom provides opportunity for Sound Shore Management, which hunts when everybody else has headed indoors. As an independent fund manager with a stable management team, one strategy, a low 0.92% expense ratio and no load, Sound Shore is an increasingly rare animal. Though down in the 12 months ended Sept. 30, the Sound Shore Fund (SSHFX) has outpaced the S&P 500 over just about any period measured, no small feat in the past 12 months. It's up an annualized 11.2%, 10.4% and 6.9% for the 20, 15 and 10 years ended Sept. 30, respectively, versus 10%, 8.4% and 3.1% for the S&P. Perhaps it's no surprise, then, that 60% of its clients have been with Sound Shore for 10 years or more.

symbol name last price % change open
  • +
  • CS
    Credit Suisse Gro
  • $46.22
  • 0.00%
  • $45.26

Credit Suisse should emerge as a winner from the capital-markets crisis, DeGulis maintains, because of the capacity that's been taken out of investment banking and private-wealth management businesses. And it has a strong balance sheet and a management team battle-tested by the Swiss bank's own restructuring in 2000-2002. Since the end of 2006, Credit Suisse has sold some assets and hedged others to cut exposure to toxic investments. It's positioned to take wealth-management share from wounded rival UBS (UBS), he says. Its private-banking business, DeGulis argues, "alone is worth the entire stock price of 37." DeGulis thinks it's worth over 70.

People owning CS also tend to own: ARGBHIBIIBBKCCOLCVSDECK

TheStreet.com Rating: D What is this?

  • +
  • RDSA
    Royal Dutch Shell
  • $0.00
  • 0.00%
  • $N/A

As for Royal Dutch, Clark says, it's the only major integrated oil company that probably will have meaningful reserve and production growth over the next three or four years, after having positioned itself in unconventional hydrocarbons, like liquefied natural gas -- now 15% of its business and soon to be 20%. Royal Dutch also is big in other growing plays, like the heavy oil reserves in Canada, and has a "nice shale natural-gas play" in the U.S. Royal Dutch, which sports a 6% dividend yield and a solid balance sheet, is worth about 75, using a normalized multiple of 10 times an EPS of $7.50 in 2009, says Clark.

People owning RDSA also tend to own: AMSFBASFY.PKBBVBGUBLLCCKCF

TheStreet.com Rating: No Rating What is this?

  • +
  • PFE
    Pfizer Inc
  • $14.98
  • 0.00%
  • $14.98

Another pick, Pfizer, is clearly out of favor, in part because its blockbuster anti-cholesterol drug, Lipitor, goes off-patent in 2011. (Lipitor will produce about $1 of the company's $2.40 earnings per share in 2008.) But, DeGulis says, the market is valuing the rest of Pfizer, with a 7% dividend yield, at 11 times on non-Lipitor earnings, "and we think that those earnings will grow." Given what's happened in the world, cash and the value of a powerful balance sheet has just gone up immeasurably, he adds, and Pfizer has $25 billion in cash -- $10 billion net of debt. Sound Shore's target for the stock is the high 20s; it's recently been around 18.

People owning PFE also tend to own: AAALLAPCBUDCOPCVXDOW

TheStreet.com Rating: C What is this?

  • +
  • AOC
    Aon Corp.
  • $35.82
  • 0.00%
  • $35.42

Another holding, Aon, with its arch rival, Marsh & McLennan (MMC), forms what is almost a duopoly in insurance brokering for the world's largest 1,000 corporations. Says DeGulis: "This is a business that is not capital-intensive, so returns are high." Aon trades at 13 times expected 2009 EPS, is taking market share, has a balance sheet that is a fortress, and is buying stock back. "There's cyclical risk, but at 13 times we like Aon," he says, and think it's worth about 55, versus a recent 38.

People owning AOC also tend to own: AEPAMPCAGCSXEIXFGNW

TheStreet.com Rating: B- What is this?

  • +
  • CAH
    Cardinal Health
  • $32.60
  • 0.00%
  • $36.45

Cardinal Health is one of a handful of restructuring candidates in the fund's portfolio. Growth has slowed in its branded and generic drug-distribution business, but the industry has consolidated, with only two other major players, AmerisourceBergen (ABC) and McKesson (MCK). Cardinal has restructured the drug operations, which are improving. "We think the drug-distribution earnings are stabilizing in the next six months, and will begin to grow again. The other half of the business, medical products, has been growing and will continue" to do so at double-digits. Cardinal Health recently said it would split its drug-distribution and medical-products units. "It's undervalued, and the two parts are worth more than the whole," says DeGulis. Sound Shore has a mid-60s target price on the stock, recently near 44.

People owning CAH also tend to own: AMGNATVIBSXERTSFDGGEHLGLW

TheStreet.com Rating: C What is this?

Portfolio not tracked!

Comments not available

ADD YOUR COMMENTS:

Cramer's Take on Headline Stocks...

By Rebecca Corvino Posted at 12:47 p.m. EDT on July 6, 2009 Oil was in the red on Monday, sending stocks and the three major indices lower as well. Bank of America (...

07.06.09 | 12:48 PM
Top Tech Short-Squeeze Plays

By Fred Fuld Posted at 12:11 p.m. EDT on July 6, 2009 Revenue and earnings surprises can cause stocks to make sharp moves upwards, which in turn can set off a short sq...

07.06.09 | 12:11 PM
Rocket Stocks for the Week

By Jonas Elmerraji Posted at 11:07 a.m. EDT on July 6, 2009 As we approach the second week in July, the markets have done a good job of matching the summer heat by keep...

07.06.09 | 11:08 AM
Four Must-See Charts: Stem Cell ...

By Stockpickr Staff Posted on July 2, 2009 Developments in the stem cell world are starting to get very interesting. On Tuesday, General Electric (GE) signed an exc...

07.02.09 | 15:19 PM
more articles
General market Technical Analysi...
11.14.07 | 22:55 PM From author ZA
Nymph's Trading Daily Trading Diary
04.13.09 | 01:10 AM From author Trading Nymph
The Presidential/Political Thread
01.02.08 | 08:05 AM From author Dave Cox
Will black social ills take a ba...
11.22.08 | 18:53 PM From author Valerie Vecchio
more forums
Q. Scott,What is the stock to buy l...
07.06.09 | 13:29 PM Asked by kjp712

A. MCD and YUM with no doubt in mind. I am
long both.

today 's lists
Dogs of the Dow

Here are the 10 stocks in the Dow Jones Industrial Average stocks with the highest yields as of the market close on June 2, 2009. more

TSC Ratings Downgrades

These stocks were downgraded by TheStreet.com Ratings on July 1, 2009. Check out the full article here.... more

Analyst Upgrades

Analyst Upgrades for July 1, 2009. Read more here. more