From The Zoo:
Barrons
by: iamlongcpq (47/M/boston, MA) 1/6/01 8:45 am
Msg: 209749 of 209752
Carrie King
Merrill Lynch Investment Management
Carrie King is an unabashed contrarian. "We sit here looking for stuff that everyone hates," she says. King analyzes stocks for a number of value-oriented Merrill mutual funds, most notably Merrill Lynch Basic Value.
A classic bottom fisher, King looks for the exact opposite of what attracts most investors. She relishes analyst downgrades, earnings stumbles, stock prices near historical lows or fundamental flaws in a business. All of these attributes scream opportunity to her, especially when the companies have strong franchises or leading market positions and clean balance sheets.
Carrie King
Of course, none of her stocks are perfect. "There are always problems in companies we own, but we try to look through them," she explains.
It hasn't been easy to be a value investor in recent years. Throughout most of the late 'Nineties, growth stocks were dominant. "We had to fight and scratch for everything we could get," King recalls. Only in 2000 did value perform better on a relative basis. That, King asserts, is mostly due to poor performance by growth and technology companies. "People have just flowed back into value because, where else are you going to put your money?" Still, King says value is positioned to perform well this year. Among her picks is First Union, a major turnaround play. The bank trades at 10 times earnings, well below its peers. The company recently cut its dividend, which King views as probably "the last shoe to drop," in terms of bad news.
She also favors Compaq. The computer maker's stock trades at 13 times earnings. New management has spent the last year or so cutting costs and improving its PC distribution model, which wasn't seen as competitive. Compaq also has a storage product and a sizable server business, although she says Wall Street mistakenly views it as purely a PC play.
In addition to being a top-notch analyst, King, 37, is a mother of three young children. "Each morning, I brush three little sets of teeth and watch CNBC," she says. But King and her children have a deal: If there are no stock blowups reported in the morning then they can switch from CNBC to the Disney Channel's Rolie Polie Olie. |
