Wal-Mart

"We believe that Wal-Mart has some of the highest visibility of sales earnings in all of retail and actually most of corporate America. The plan for Wal-Mart is essentially to continue to build the super centers, they're continuing to attack the discount stores, and they have a neighborhood market format, all in the U.S. Within the international side, they have a huge presence in the United Kingdom, Canada, they bought some stores in Germany, and they continue to grow their business in the international markets aggressively as well.

"One of the biggest opportunities that you guys mentioned earlier in your presentation was the supermarket industry. The supermarket industry is a $682 billion industry, and Wal-Mart has about 12 percent market share. Just in 1992 they had 34 super centers; today they're operating over 1,200, and we believe that that's their biggest opportunity. And we continue to believe that they will continue to consolidate the industry and take tremendous market share from many of the competitors in that industry existing today.

"We're of the opinion that Wal-Mart has one of the strongest management teams in retailing, led by Lee Scott. We believe that they have a very deep management team that's extremely cohesive and continue to really think much more ahead of the pack. And we believe that we feel very comfortable with their management team and their execution. There are clearly many risks to such a big company, but we believe that they're up to the task and we would never doubt Wal-Mart and their abilities."

Target

"Target we believe is a very viable competitor to Wal-Mart. They've been able to establish a differentiated format where they go a little bit more on the upscale side of the fence, where they have better product and different designer product, you know, while competing still in a discount format.

"We think that Target continues to have plenty of expansion opportunities across the U.S. And we would note that Target has about a third the size of Wal-Mart's domestic store base and half the size of Kmart's. We believe there's long-term growth opportunities ahead for Target as well."

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Sears

"I like Sears, and the investment thesis there is they don't have to beat Wal-Mart, because Wal-Mart is a tough competitor. Sears is definitely a buy. It's now one of our top 10.

"Sears is a department store that also has a credit card business. The department store has very good hard lines -- Kenmore, Craftsman -- where they continue to hold share and even gain some market share. But the soft lines part of it has not done as well. And they have a turnaround underway there.

"The stores really are improving and you can see that now. And we had owned a small position. They also have a credit card business. Now the retail sales had shrunk so much that credit cards made up 60 percent of the profits. The idea is as the retail improves it will balance out the credit card."

JCPenney

"It's a two-part story. It has a retail section that has not done well. They're in the second year of a five-year turnaround. They also own drug stores, the Eckerd drug stores, a botched integration that they've corrected now. And they have great assets in that they're primarily in the Southwest, which is a good place for a drug store."

Prudential

"They de-mutualized a year ago. They have $5 billion in excess capital that they'll return $1 billion a year to investors to grow return-on-equity near the industry average to 12 percent from 6 percent. And they'll also do that through cost savings."

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