WSJ journal article today on the AllStar Analysts.
In the Cable & Entertainment industry Murray J. Arenson of Hoak Breedlove Wesneski & Co., Dallas won top honors. His two picks
looking forward are SeaChange and TVGuide.
interactive.wsj.com
Cable & Entertainment
By BRUCE ORWALL
Staff Reporter of THE WALL STREET JOURNAL
Call them The Cable Guys.
Each of the top three stock pickers in the cable and
entertainment category of this year's survey
prevailed by cashing in big bets on cable rather than
entertainment companies.
First-place finisher Murray J. Arenson of Hoak Breedlove Wesneski & Co., Dallas,
was typical. He had buy ratings on a handful of big cable interests at the beginning
of the year, and hadn't changed course by year end. The result: success with
companies such as Century Communications and Cablevision Systems, which
gained 225% and 109% respectively, for an overall portfolio return of an estimated
113%. That earned him a slot on the survey's Home-Run Hitters Team.
The cable industry "had finally come to a time when it was going to make good on
some of the promises they'd made for a long time," Mr. Arenson says. After years of
rebuilding and upgrading their systems, he adds, new revenue streams resulting
from cable modems and digital set-tops finally seemed real.
"The cable industry has a history of overpromising and underperforming, so when
they actually come through, it generates a lot of excitement," he adds.
Looking ahead, Mr. Arenson, 35 years old, is keen on companies that will provide
support services for the cable industry's new offerings. Two such opportunities, he
says, are TV Guide, which offers digital programming guides, and SeaChange
International, a maker of video servers for the video-on-demand systems that will
one day give cable subscribers easy, convenient access to a wide array of movies.
Mr. Arenson, however, won't have much time for movies, his beloved golf or
anything else for the foreseeable future; he and his wife have a 3 1/2-month-old
baby girl.
Mr. Arenson's tale was virtually identical to those of the other All-Stars. "I'm not
going to have a story that's much different than anyone else's," Buckingham
Research's David M. Goldsmith jokes. The two-time All-Star had buy ratings on a
half-dozen top cable stocks for most of the year, and finished with an estimated total
return of 107%. His top pick was also Century Communications.
"It finally came of age," Mr. Goldsmith says, referring to the market's recognition
that cable-TV systems could deliver Internet and phone services, as well.
At the beginning of the run, Mr. Goldsmith says, the cable stocks "were terribly
cheap." Although values have run up for many of the companies involved, he still
has buy recommendations on some of the group's top performers. Among his picks
are Adelphia Communications, which has a major foothold in the Los Angeles area,
and AT&T, whose new cable-heavy strategy he likes.
Third-place finisher Spencer Grimes, 32, of Salomon Smith Barney, was equally
humble about his 97% estimated return. "Everything went up" in the cable group, he
notes. Mr. Grimes, too, offered buy recommendations on a wide-ranging portfolio of
cable offerings; his top performer was Adelphia, which rose 154% after his
late-January advice.
"I can't say that I anticipated such aggressive consolidation," Mr. Grimes says of
the deal-making that has also helped drive up the cable stocks. But he did act on his
notion that the cable business was being seen less as a sort of utility and more as a
delivery system for additional forms of communication.
Mr. Grimes, who also won an award for earnings-estimate accuracy, says he believes
that the industry is "at a bit of a plateau right now as this [merger and acquisition]
activity comes to a close."
He has lowered his rating for some of the industry's stalwarts but still recommends
Comcast, among others. "They're just exceptionally well-managed," he says, and
that will be critical as the industry's kings now try to manage the massive empires
they have assembled.
Estimate Accuracy -- (of 21 analysts in group)
Name
Honor
Firm
Factor
David J. Londoner
Schroder & Co.
0.61
Alan Kassan
4
Deutsche Bank Securities
0.64
Frederick W. Moran*
3
ING Baring Furman Selz
0.70
Spencer Grimes*
Salomon Smith Barney
0.70
Jill S. Krutick*
2
Salomon Smith Barney
0.72
Stock-Picking Skill -- (of 21 analysts in group; median return 75%)
Name
Honor
Firm
Return
Murray J. Arenson
Hoak Breedlove
113
David M. Goldsmith
2
Buckingham Research
107
Spencer Grimes*
Salomon Smith Barney
97
Douglas S. Shapiro
Deutsche Bank Securities
93
Frederick W. Moran*
3
ING Baring Furman Selz
90
Honor refers to the number of years an analyst appeared in the All-Star roster.
*Winner in more than one category
Definitions & Notes
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