Harris Associates is typically one of the better value strategists out there - especially when it comes to finding value in technology stocks.
One reason is why is the stock-picking acumen of chief information officer David Herro. He was interviewed on Tech Ticker this morning and had some interesting things to say about the tech sector and the prospects - long-and short-term of some of the sectors biggest names like Intel and Dell.
I was scribbling notes from the interview as fast as I could. So, as accurately as I can gauge, here is Herro's take on the tech sector..
"Opportunities in the technology space are good. Right now, we are running some global portfolios where we have high technology weighting. Why? Because technology is a good cash flow generator and many companies have good moats around their businesses that protect their profit margins. Look at Intel. Intel is simply the global leader in chip technology and they’re recent (quarterly) numbers say they see no diminishment in performance. In the late 1990’s, because of valuations, we wouldn’t touch a tech stock. And that was when tech comp;anies were expensive."
"Now, they are cheap and that’s what we do as value investors, and we will do with that Intel and SAP and Dell.
"We have big positons in HP and Dell – we don't see them as contradictory – they're not taking businesses away fom ech other. Michael Dell is back and is reengineering his business. He’s a very capable guy."
"Often, investors can be way too short-term focused. But we have to be patient. This stock could rise up to 70% in the next few years. It’s worth the wait."
Tech Talk points out that SmartMoney dubbed Herro as one of the "World's Greatest Investors" in 2007 and Morningstar named him 2006's "top international fund manager."
More recently, Herro has gotten attention (some unwanted) for being a steadfast bull on European banking stocks caught in the global credit crisis. He's also taking a contrarian stance on the state of the economy.
I think he's well worth listening to.