"Of Mutual Interest"-Thomas Forester, Portfolio Manager, Forester Value Fund
Tuesday, June 09, 2009PAUL KANGAS: In tonight's "Of Mutual Interest" segment, we look at one of the only large cap mutual funds that made money last year, the Forester Value Fund. So far this year, it's up 3.2 percent, just two points behind the Standard & Poor's 500. But it's shined over the long term, trouncing the S&P in one-year, three-year and five-year periods. Thomas Forester, completing his first decade at the helm of Forester Value, joins us from Chicago. Tom, welcome to NIGHTLY BUSINESS REPORT.
THOMAS FORESTER, PORTFOLIO MANAGER, FORESTER VALUE FUND: Thanks, Paul.
KANGAS: What did you do right last year?
FORESTER: Well, Paul, we saw the problems with home prices and the problems with the mortgages and so we underweighted financials and we over weighted consumer staples and we also over weighted healthcare which did quite well and we had the two main stocks that were up in the Dow last year, McDonald's and Wal-Mart.
KANGAS: As part of our ongoing series, we've been taking a close look at the markets this month. Do you think the stock market has finally bottomed? Are you less defensive now? How do you stand?
FORESTER: Well, I do think it has bottomed, but I also think we're in a trading range. We could go up 20 or down 20 from here.
KANGAS: There are only 45 stocks in your fund. What do you look for, undervalued issues, or what?
FORESTER: Definitely. We love buying bargain stocks that have great appreciation potential. We think they'll do great over the long-term.
KANGAS: What are your top holdings and why do you like them?
FORESTER: A few of them that we really like right now are Microsoft. They had problems with Vista, but Microsoft 7 is on its way and Microsoft Bing has gotten great reviews. We think they'll do well. We like Hewlett- Packard. We think that you'll see a corporate replacement cycle coming soon. We think that both of those companies will benefit greatly there. We like both Chevron and Conoco, a couple oil stocks that are benefiting from the oil price increase that we're seeing right now.
KANGAS: Now, until recently you stayed away from financials, but then you bought State Street Bank. Do you expect to add more financial stocks and if so, why?
FORESTER: Yes. We bought State Street right at the bottom in March. We liked that company. We think they'll do well going forward. But we also think that financials have gone quite far quite soon. We would expect to see some sort of a pullback here and we'd expect to be buyers on weakness on financials. KANGAS: Do you personally own any of the stocks you've mentioned here tonight, Tom?
FORESTER: I own a lot of shares of the fund which owns all those stocks, but not any of the stocks individually.
KANGAS: Well finally, you believe we've seen a market bottom but are we in a new bull market?
FORESTER: You know, I think if you're a longer-term holder, in the three to five-year range, at these valuations, I think you'll do quite well in the market. One of the kickers, you get from here is you get multiple expansion, which is great for returns.
KANGAS: Very interesting indeed. Tom, I want to thank you very much for your insights. And we wish you another decade of successful stock picking.
FORESTER: Thanks so much, Paul, great seeing you.
KANGAS: My guest, Thomas Forester of the Forester Value Fund.
