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Technology Stocks : Hewlett-Packard (HPQ) -- Ignore unavailable to you. Want to Upgrade?

To: Captain Jack who wrote (2030)	10/25/2002 12:14:04 AM
From: PCSS	Read Replies (1) \| Respond to of 4345

Kelmon likes discount blue-chips Strategy Fund likes AOL, Hewlett-Packard, Citigroup PALO ALTO, Calif. (CBS.MW) - When Matthew Kelmon makes his picks for the Kelmoore Strategy Fund, he surveys the S&P 100 and finds some of the most beaten- down names in the market. The goal of the Strategy Fund (KSAIX: news, chart, profile), (KSOIX: news, chart, profile), created in 1999, is to generate cash flow. Kelmon, the portfolio manager, does that by owning the equities and writing covered options against the portfolio. That means an investor can buy the stock at a premium, betting it will yield a higher price down the road. The fund is currently overweight financials at 30 percent with the rest of the stocks equally divided by consumer goods, natural resources, manufacturing and technology. "We want companies that will be in business for the long-haul; the ones that will survive the downturns and thrive in upturns," Kelmon said. Year-to-date the fund is down 27.2 percent vs. the S&P 100, which is off 21.54 percent. On a one-year annualized basis, the Strategy Fund is down 22.9 percent vs. an 18.27 percent loss at the benchmark. Within consumer goods, Kelmon likes AOL Time Warner (AOL: news, chart, profile), which trades for just over half its book value and 13 times 2002 earnings. "It's trading at a discount to competition and the overall market. Disney trades at 1.5 times book value and 35 times earnings. Once concerns get cleared up, AOL has tremendous potential. Strength in cable and entertainment will offset weakness in the online unit. I do believe they will turn around online." AOL shares closed up $1.02 at $14.55 on Thursday. Kelmon likes Hewlett-Packard (HPQ: news, chart, profile) because it too trades at a discount to the competition and the overall market. "This stock trades for the value of the printer business and awards next to nothing to the rest of the company. We've seen the death of the PC 100 times and it always proves to be resilient. The addition of Compaq will eventually bear fruit." Hewlett-Packard shares closed down $0.59 at $13.80. Finally, Kelmon's a fan of Citigroup (C: news, chart, profile), despite the spate of bad news surrounding the financial institution. "It's the world's largest money center bank and it's a diversified financial services company. The bad news is baked into the stock. Until we see an upturn, we won't see dramatically higher prices, but when it comes, it will be so quick, (investors) need to own the names now." Citigroup shares finished $0.82 lower at $34.67.