(GuruFocus, November 25, 2009) Investment Guru Robert Olstein made a few wrong bets in 2007 and 2008. Businessweek magazine had a good write-up on his experience. According to the article, in the last six months of 2007 through the first half of 2008, he loaded up financial and technology stocks when they got beaten down. He had the stroke ofgenius of selling AIG in late 2007 when he saw a $40 billion of toxic mortgage related assets on the book. But he made a dreadful mistake in keeping adding on Citigroup (C).
Of course, you know what happened afterwards. His fund Olstein All Cap Value Fund lost 43.8% last you vs. S&P 500’s 37% loss. Here is his performance for the last 10 years. He has actually lagged behind the passive index for a number of years.
Reflecting on the mistakes, Olstein made a few adjustments in his investment strategy. No longer he thinks it is OK to make money based on a high financial leverage model. He got rid of the financials and switched into quality stocks. Since the beginning of the year, the All Cap Value Fund returned 34% vs. S&P 500’s 23%.
Watch this Fox Business News video in which Olstein reflected on the mistakes he made and the stocks and sectors he likes:
(click on this link to watch the interview if you don't see the video player)
Here is the top holdings of Olstein as of September 30, 2009.
No. 1: Intel Corp. (INTC), Weightings: 3.51% - 961,600 Shares
Intel Corporation, one of the world's largest semiconductor chip maker, supplies the computing and communications industries with chips, boards, and systems building blocks that are integral to computers, servers, and networking and communications products. Its products are offered at various levels of integration and are used by industry members to create advanced computing and communications systems. Intel Corp. has a market cap of $108.27 billion; its shares were traded at around $19.34 with a P/E ratio of 29.3 and P/S ratio of 2.9. The dividend yield of Intel Corp. stocks is 2.9%. Intel Corp. had an annual average earning growth of 0.4% over the past 10 years.
In the video you just watched, Olstein stated that he likes INTC because of its competitive position, its strong balance sheet, and its expanding in R&D during recession.
No. 2: Microsoft Corp. (MSFT), Weightings: 2.95% - 611,000 Shares
Microsoft develops, manufactures, licenses, and supports a wide range of software products for a multitude of computing devices. Microsoft Corp. has a market cap of $265.97 billion; its shares were traded at around $29.79 with a P/E ratio of 18.4 and P/S ratio of 4.6. The dividend yield of Microsoft Corp. stocks is 1.7%. Microsoft Corp. had an annual average earning growth of 10% over the past 10 years. GuruFocus rated Microsoft Corp. the business predictability rank of 4-star.
No. 3: HewlettPackard Company (HPQ), Weightings: 2.46% - 279,700 Shares
Hewlett Packard is one of the leading global providers of computing and imaging solutions and services for business and home. Its major businesses include Imaging and Printing Systems, Computing Systems and Information Technology Services Hewlettpackard Company has a market cap of $118.67 billion; its shares were traded at around $50.05 with a P/E ratio of 13.5 and P/S ratio of 1. The dividend yield of Hewlettpackard Company stocks is 0.6%. Hewlettpackard Company had an annual average earning growth of 25.8% over the past 5 years.
No. 4: Macy's Inc. (M), Weightings: 2.35% - 689,800 Shares
Federated Department Stores, through its subsidiaries, is one of the leading operators of full-line department stores in the United States. The Company's subsidiaries operate department stores under the names Bloomingdale's, The Bon Marche, Burdines, Goldsmith's, Lazarus, Macy's, Rich's and Stern's. These department stores sell a wide range of merchandise, including men's, women's and children's apparel and accessories, cosmetics, home furnishings and other consumer goods. Macy's Inc. has a market cap of $7.38 billion; its shares were traded at around $17.56 with a P/E ratio of 16.4 and P/S ratio of 0.3. The dividend yield of Macy's Inc. stocks is 1.2%. Macy's Inc. had an annual average earning growth of 2.6% over the past 10 years. GuruFocus rated Macy's Inc. the business predictability rank of 2-star.
No. 5: The Home Depot Inc. (HD), Weightings: 2.34% - 471,800 Shares
Home Depot is the one of world's largest home improvement retailer. The company offers a level of service unprecedented among warehouse-style retailers. Home Depot stores cater to do-it-yourselfers, as well as home improvement, construction and building maintenance professionals. The Home Depot currently operates in the USA, Canada, Chile, Puerto Rico, and Argentina. The Home Depot Inc. has a market cap of $47.47 billion; its shares were traded at around $27.85 with a P/E ratio of 17.2 and P/S ratio of 0.7. The dividend yield of The Home Depot Inc. stocks is 3.3%. The Home Depot Inc. had an annual average earning growth of 19.5% over the past 10 years. GuruFocus rated The Home Depot Inc. the business predictability rank of 5-star.
According to the video interview, Olstein likes the company because the company's earning is severely suppressed by the recession and company made a right decision of cutting back on expansion and focusing on the existing stores.
No. 6: W.R. Berkley Corp. (WRB), Weightings: 2.2% - 466,000 Shares
W. R. Berkley Corporation is an insurance holding company, which through its subsidiaries, operates in all segments of the property casualty insurance business: regional property casualty insurance; reinsurance; specialty lines of insurance; alternative markets; and international. The company's regional insurance operations are conducted primarily in the Midwestern, Southern and Northeastern sections of the United States. Reinsurance, specialty insurance and alternative markets operations are conducted nationwide. W.R. Berkley Corp. has a market cap of $3.93 billion; its shares were traded at around $24.57 with a P/E ratio of 11.4 and P/S ratio of 0.8. The dividend yield of W.r. Berkley Corp. stocks is 1%. W.r. Berkley Corp. had an annual average earning growth of 23.5% over the past 5 years.
Conclusion
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