"Market Monitor"- John Dorfman, Chairman of Thunderstorm Capital
Friday, September 19, 2008PAUL KANGAS: My guest "Market Monitor" this week is John Dorfman, manager of the Dorfman Value Fund and chairman of Thunderstorm Capital, an investment advisory firm based in Boston, Massachusetts. Welcome back to NIGHTLY BUSINESS REPORT, John.
JOHN DORFMAN, CHAIRMAN, THUNDERSTORM CAPITAL: Thank you very much, Paul.
KANGAS: When you named your advisory firm Thunderstorm Capital, you must have had a premonition of things to come on Wall Street, is that true?
DORFMAN: Well, in a way, it is true, because we like to buy when things look frightening. But then we think they are likely to get better. So that's what we had in mind with the name.
KANGAS: OK, well, appropriate recently. Anyway, does the stock market's positive reaction to the government's intervention to our capital markets tell you that a bottom has been reached or is there more downside ahead?
DORFMAN: I would like to think that a bottom has been reached. I think we're near a bottom but not necessarily at one. I'm guessing jagged market action for the next month or two. And then I'm anticipating most likely a good rally in the fourth quarter.
KANGAS: OK. When you were last with us in March, I asked if the stock market's volatility would continue. And you said yes in a big way. And boy, you were right on the money. Do you see any relief from the volatility ahead?
DORFMAN: Most likely not, Paul. But I do think that people should keep in mind that this volatility may present opportunities to find good buying points for stocks that you intend to hold for three or five years or even longer. And most investors, in my opinion, that is what they should be doing. So volatility can mean opportunity.
KANGAS: Is this a good time to buy some of these depressed financial stocks?
DORFMAN: In my opinion, yes. Dorfman Value Fund is overweight financials. I just think there are bargain-priced stocks in this sector including some very good, well-run companies.
KANGAS: What other sectors are attractive now?
DORFMAN: Well, I like the pharmaceuticals. I think that, you know, they add a lot of value and are selling pretty cheaply now. I like metals and energy, which I had liked for years. And in the spring they seemed to be getting expensive, but now they have been slammed and they are cheap or inexpensive again, so I like those.
KANGAS: Last March when you were with us, you gave our viewers five stock recommendations. Let's see how they've done since then. The first one, AstraZeneca (AZN), up 20 percent. Nice call, are you still with it?
DORFMAN: Yes, I certainly am, Paul. I think they have a good drug pipeline.
KANGAS: OK. And then Columbia Sportswear (COLM) gained 5 percent since then, are you still with that, would you buy it here?
DORFMAN: Yes, yes, no debt, good products. I continue to like Columbia Sportswear.
KANGAS: OK. Devon Energy (DVN) you liked, and it's up 9.6 percent. Still with it?
DORFMAN: Yes. Devon I have held for years and at the moment I see no reason not to hold it for several years more.
KANGAS: Mm-hmm. The big clinker in your recommendations, Goldman Sachs Group (GS), down 27.7, you said at the time you are taking a chance and you did. (LAUGHTER)
DORFMAN: Yes. I bought a little more for the fund on Monday, and I continue to think they have a tremendous pool of talent. And I like Goldman.
KANGAS: OK. And the other one was a short sale recommendation, Vail (MTN), and since it's down 6.4 percent from where it was when you said short it, you have a profit of 6.4 percent. Are you out of that position, you've covered?
DORFMAN: I had a profit on TV, but in real life, we had a loss and we were forced to cover.
KANGAS: OK. We are have just a minute left. Let's have some recommendations if you have some new ones, quickly.
DORFMAN: I would like to start out with a new one, Oshkosh Corp. (OSK). They make military transport vehicles as well at fire engines and cement mixers.
KANGAS: OK.
DORFMAN: The stock has been slammed and I think it is a good value.
KANGAS: O-S-K on the Big Board. OK. Next, moving along.
DORFMAN: Next is Apache (APA) or A-P-A, another good solid energy stock with a nice balance of oil and gas.
KANGAS: OK, 30 seconds left, John.
DORFMAN: I would like to re-recommend AstraZeneca for the reasons I said, a strong pipeline. And then a fourth recommendation is a real contrarian one, Gannett (GCI), the newspaper company. They're an information company that can sell a lot of ways besides newspapers.
KANGAS: OK. And you have a short sale recommendation, you say.
DORFMAN: I do. This time I would like to recommend for people who do short, Illumina (ILMN), which makes supplies for the biotech industry. It is just a very expensive stock and there has been some insider selling lately.
KANGAS: Do you own any of these that you have recommended?
DORFMAN: I own all the ones that I have recommended. And in one of our programs we are short Illumina.
KANGAS: Thanks very much for being with us again, John.
DORFMAN: You bet.
KANGAS: My guest, John Dorfman of Thunderstorm Capital.
