Six Stocks That Should Outperform the Markets - Barron's Interview

Barron's interviews fund manager David J. Williams. He looks for cheap, long-hold companies, particularly those in the midst of a restructuring or some other turnaround, that are being overlooked by the market. His favorite stocks are those whose sum-of-parts are being ignored by Wall Street. Stocks he likes:

• J.C. Penney (JCP) -- at 12x earnings, JCP may be the cheapest retailer. At some point, the consumer will come back.
• Morgan Stanley (MS) -- subprime writedowns offer investors a rare opportunity to buy a high-caliber brokerage at just 1.2x tangible book value. Things will right themselves sooner than later, producing a nice P/E pop. Lehman Brothers (LEH) -- a little pricier, but its earnings are going to be more predictable than most of its ilk.
• Petroleo Brasileiro (PBR) -- people are convinced oil prices will come down, which is why its shares ($112) trade at a discount to its net asset value ($140).
• Invesco (IVZ) -- at 12x earnings, you get a well-managed company that's also a contrarian bet the market will not stagnate this year.
• Freeport-McMoRan Copper & Gold(FCX) -- a commodity play, particularly on the price of copper. With strong demand from India and China, copper prices should stay high.

Comments

[ArlHts07:]

Just the other day, there was an article on seekingalpha that Morgan Stanley is the riskiest financial institution out there and that there is a risk of its stock trading in low 20s (currently at 40). And now a fund manager is suggesting buying MS. What do I do?

2008 Mar 09 02:43 PM

[User 120461:]

Barron's have failed to carry out a true investigative journalism again. If you read the original article, it is nothing but advertisement for the fund that has recent problems with net inflows. The money manager does not share any secrets or does not add any value to this semi-PR article. It is also sad that the author - LAWRENCE C. STRAUSS failed to write for the readers, but instead opted to help the mutual fund company. These picks are simply horrible. A monkey with a dart will do just the same.

2008 Mar 09 11:17 PM

[stevestor:]

I do not think the preceding criticism is warranted, as this is represented as a manager interview, & not an investigative piece. David Williams' record at Excelsior Value Restructuring speaks for itself. Morningstar currently shows a 5 star rating with a 19.85% 5 year annualized rate of return for his fund............

2008 Mar 13 12:49 PM

[stevestor:]

Confirming comment only

2008 Mar 13 12:52 PM