Manager optimistic for the long run
By Justin Wiser, CBS.MarketWatch.com
NEW YORK (CBS.MW) -- Two losing years for U.S. stocks haven't dimmed Paul Blaustein's hopes for the market's future.
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Q. What areas within technology look attractive?
We tend to be over-represented in semiconductor companies. We can identify companies in this business that can produce high growth and earn high returns on capital. Within semi's, we are very interested in two areas: analog, where we own Maxim Integrated Products (MXIM: news, chart, profile); and programmable logic, where we own Altera (ALTR: news, chart, profile) and Xilinx (XLNX: news, chart, profile).
Maxim has high growth and most of the circuits they sell do not have direct replacements made by other companies, so the margins tend to be quite high and the product cycles long. Altera and Xilinx also have a very good business because their programmable chips are not easily replaced by substitutes. They tend to split about 40 percent each of the market share in their business.
These are companies that produce superior value for their customers, and there's a serious cost of exit to the customer to stop dealing with them.
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