Thursday, April 24, 2008

Richard Pzena Interview: Doubling Down in Financials

Anything Richard Pzena has to say is a must read. Pzena was interviewed by Forbes magazine yesterday and shared his thoughts on his current investments and the financial industry in general. Pzena believes many of his financial investments are trading for less then 5 times their normal earnings power. Pzena's current picks are : Alacatel-Lucent, Freddie Mac, Citigroup, Allstate, Capital One Financial, Torchmark, Fannie Mae, Bank of America, Johnson & Johnson, Whirlpool,

Excerpts from the Forbes interview:

But we are in a recession right now, won't these companies suffer

There is a difference between what gets hurt and what stock prices go
down. People don't understand that concept. Typically, in a recession, when
are in the worst environments, the companies most negatively impacted
are the
ones that actually do the best in the stock market.


Because they do poorly before the recession. Everyone knows it will be
for retail in a recession. So they kill retail stocks before they get
into a
recession. Once they're in it, people start to look out to the other
side. All
the speculation shifts to this question: When is the recovery?
That is when you
see cyclical kind of companies bottom out. That has
happened in every single
prior economic cycle. I think it's impossible for
housing stocks to get killed
any worse. Banks and finance companies have
gotten killed. Credit card companies
have already taken provisions so their
earnings and stock prices have gotten
killed. People expect the worst in the
credit card business.

Full Interview Via Forbes

Pzena Investment Management: First Quarter Commentary

Another Interview from December 31, 2007 Via Barrons:

Opportunity Amid the Ruins