"Market Monitor" - Richard Steinberg, President of Steinberg Global Asset Management
Friday, December 02, 2005JEFF YASTINE: Our "market monitor" guest tonight says it`s time for investors to load up their portfolios with stocks that favor growth over value and large over small. Here to tell us more -- Richard Steinberg, president of Steinberg Global Asset Management. Rich, nice to have you back.
RICHARD STEINBERG, PRES., STEINBERG GLOBAL ASSET MANAGEMENT: Good to see you, Susie.
GHARIB: Tell us, large stocks over small stocks and growth stocks over value. What`s your thinking?
STEINBERG: The last two or three years there`s been an enormous move in mid cap and small cap. And we think that endowments and large institutional investors will start to make the shift back to the large cap area and we`re seeing much better fundamentals on the growth side of the equation as opposed to value. And that would be defined by the, S&P 500 growth index.
GHARIB: All right. Let`s go and review some of the stocks that you recommended to us when you were last here back in February and going down to list, Anheuser-Busch. That was one of your picks. It was $48.53 the last time you were here. It`s gone down a notch. I understand you still are holding it. Why so?
STEINBERG: We own Bud still. We think it`s a great franchise. Warren Buffet has come in, has taken a large position in the stock. The beverage stocks are unwanted and unloved. This is the time to buy good brands and you own them.
GHARIB: What about gold? You had a nice move there, it`s up now what, over 50.
STEINBERG: Gold`s over $500 an ounce. We`re still gold bugs. We think you could see $600 by next year. Gold will outperform bonds and that should be a position people continue to hold.
GHARIB: All right and Leucadia National also up from where it was back in February, a nice move there. Are you still holding on to this one?
STEINBERG: Yes. This is a mini Berkshire Hathaway. We still own it, Ian Cummings and Joe Steinberg -- no relation -- are very, very sharp operators. The difference with them is they`re willing to sell anything at any price.
GHARIB: What about Comcast, Rich?
STEINBERG: I`m still recommending that. We`ll talk about it a little bit later. This is a great cable name, another unwanted, unloved area. Stocks down, this is the time to double up on this name.
GHARIB: All right. Let`s talk a little bit more about it in the terms of your new picks. You still have this on your list as a stock for investors to buy in. Give us your thinking on this one.
STEINBERG: $2.75 in cash flow, $4 and we think the stock is probably a 30 to 40 percent mover from here. People don`t care yet but voiceover IP, digital cable, this is a big deal and these guys have pricing power now.
GHARIB: So today it closed around the $27 level. What`s your target then on it?
STEINBERG: We have a $38 target. Again, Warren Buffett is now an investor in this. We`re just a couple months ahead of the Berkshire Hathaway team in some of these names.
GHARIB: All right. Let`s talk about some of your other new names. First on your list, Johnson & Johnson.
STEINBERG: Johnson & Johnson just did a great, great maneuver by buying Guidant 15 percent below their original price. These are great execution guys. In the health care area, we`re favoring device and supply companies over the large pharma names like Merck and Pfizer.
GHARIB: And so even though the stock has been a little bit in a downdraft there, that`s not of concern to you.
STEINBERG: Arbitrage related, $3.80 in earnings, I think you could see $80 in the stock.
GHARIB: OK. What about this Genworth Financial? It was just added to the S&P 500 today.
STEINBERG: We got a little bit of a boost this week. This was the insurance arm of GE that was spun off. GE still owns 20 percent. They have a billion dollars in excess capital. They`re in life insurance, health insurance, annuities. It`s a great cash flow business and they`re much cheaper than the rest of their peer group and this is a name that`s high quality that people should own in insurance.
GHARIB: And now your last pick, this one had a very nice move today, Zimmer Holdings. What`s going on over there?
STEINBERG: Zimmer Holdings is a med device company in the hip replacement, knee replacement type of business. We`re a little bit early this morning but they had great news coming out of the Merrill conference today. The stock was very depressed because of pricing and now we think that it`s on its move up. I wouldn`t be a buyer with this huge move today, but if it pulls back a little bit, I think you could see the stock back in the high 70s to low 80s. This is a name that you`ll see consolidation in.
GHARIB: All right. I hope everybody`s taking notes on this. Rich, do you own any of these stocks personally? What`s your firm`s relationship?
STEINBERG: We own all these names with the firm. I own none of them personally.
GHARIB: Rich, always a pleasure to have you on the program, thank you so much.
STEINBERG: Great to see you, Susie.
GHARIB: We`ve been speaking with Richard Steinberg, president of Steinberg Global Asset Management.
