The Morningstar Investor Conference concluded on Friday, June 25, with three legendary "Monsters of Stock" discussing their recent picks. The panel, moderated by Morningstar's Pat Dorsey, included Legg Mason Capital Management Chairman and Chief Investment Officer Bill Miller, who runs Value Trust and Opportunity Trust mutual funds. They were joined by two other well-known stock pickers, Stanley Cates, president of Southeastern Asset Management Inc., and Richard Freeman, co-manager of Legg Mason ClearBridge's Aggressive Growth, Multi Cap Growth, and All Cap Growth strategies.
The catastrophe in the Gulf of Mexico from the BP spill led to a discussion of oil and gas stocks and risk. Miller noted that Value Trust is lighter on energy stocks, although he said that last year they held some Chesapeake and Conoco. Cates likes Chesapeake, calling it the "best in natural gas assets." Freeman noted that the situation in the Gulf would "probably force some marginal players out" of deepwater drilling.
With the agreement in the wee hours on the House-Senate conference's final language combining the Senate and House financial services reform bills, it's expected that President Obama will sign the final bill into law before July 4. Naturally, financial services holdings were part of the closing panel discussion.
Miller said Value Trust holds about 10% large banks and that it has owned "financials in one form or another for 30 years," adding, "it's difficult to do well without financials." He likes Citi, trading "below tangible book value," and which he expects should move from earnings of .50 cents per share to .65 or .70 cents per share over the next two years. He also says he likes "Aflak, American Express and Capital One."
