Edmonds AOL Chat: Chris Tackles Questions on Energy Companies By Christopher Edmonds Special to TheStreet.com 6/5/01 12:35 PM ET

Christopher Edmonds chatted on AOL's MarketTalk, produced by Sage Online, Tuesday, June 5 at 10:30 a.m. EDT.

Comment: Live from Atlanta, Ga., please welcome Chris Edmonds, contributing editor, TheStreet.com.

CSEonTSC: Great to be here -- lots going on today -- OPEC meets, SuperComm here in Atlanta and market action. Let's get to it!

Question: Have we seen the worst of the downturn for Internet stocks, or will more companies fall off the map?

CSEonTSC: Yes and yes. I think the companies with solid business plans and moneymaking potential will begin to perk up from here. Yet, there is still a lot of excess in the space and they will have to go away.

I urge you to check out the basket of Internet stocks that my colleague, James Cramer, has put together as a starting point in hunting for bargains. Seems like a good place to begin

Question: Did you ever hear of PBI works for the IRS finding people to update address for 401 K?

CSEonTSC: I can't say I have -- there are significant issues, however, in finding people who have left jobs with 401k balances. Interesting concept.

Question: Your opinion on CPST long term please?

CSEonTSC: Good question -- clearly Capstone's small turbine product is a very important part of the energy solution, longer term. So many of these new energy plays are way ahead of themselves in price, but that is the market discounting the future.

Capstone is a survivor and, while I wouldn't chase at high prices, I would be inclined to be an investor in Capstone and other new energy technology companies over the long term.

Question: Various magazines have the top "performing analysts/fund managers" articles out. Have you read and agreed with any of them?

CSEonTSC: Read them all, agree with some and disagree with others. There has been so much talk of late about good and bad managers and analysts.

It is all a matter of degree. Are there terrific analysts and managers and really bad ones. Sure.

However, from a personal perspective, I look to those I can trust with good calls and good style and develop a list of those that interest me. Everything else is just noise in the system to me.

Clearly, however, the new managers that had never experienced a downturn and were in the go-go tech names have really crashed and burned.

Track record is all of a sudden important again!

SageReba: Can you name some of the companies and/or managers that you especially would recommend?

CSEonTSC: I agree with Jim Cramer that Bob Olstein is a place I'd want to be right now. Also, I have a great deal of respect for Bill Miller at Legg Mason -- hard to beat the S&P for a decade straight -- I am a Value Trust and Opportunity Trust shareholder.

SageReba: How can the novice investor fine-tune the part of determining who is noise and who means money?

CSEonTSC: By reading a lot and through experience. I think, for example, the personal finance pages at TheStreet.com provide a wealth of information about good and not so good fund managers.

Ian McDonald is a must read on the fund side. And, Cramer's Smarter Money pieces on funds lately have been very prescient.

You can look to other sources as well. Morningstar clearly provides good historical data as does Lipper.

Question: Do you think Rambus is due for a pop in the short term due to the incredible amount of shares sold short?

CSEonTSC: Clearly, you need to look at short interest. But, it depends on the pressure -- is there a possible squeeze. You tell me what the catalyst might be and then we'll discuss it.

Until then, nothing doing...

Question: Have you heard of UPL, if so, can you shed any light on this company and their future?

CSEonTSC: Small E&P company -- decent Wyoming prospects and some interest in China. All the E&P names are interesting, some more than others. Ultra is a smaller name and one I don't pay a lot of attention to.

If you've done your homework and find it interesting, I would key on production life and cash flow beyond this year -- everyone is making money hand over fist this year...

Question: Do you have any view on energy stocks, particularly El Paso Gas which is hitting a new recent low around $57, a price not seen since last October?

CSEonTSC: El Paso is an interesting company ... The pressure has come from claims of price manipulation in California gas markets as well as some concern over its developing telecom interests.

They have some headline risk remaining in California but, like Calpine, etc. -- EPG is part of the solution. Nice risk-reward at these levels. Looking at it myself, but don't own yet.

Question: Do you think that the people mentioned in the articles you mentioned earlier are long-term conservative investors or long-term aggressive investors or is there such a thing as a common thread amongst the winners?

CSEonTSC: Conservative vs. aggressive is an artificial criteria in my book. Take Bill Miller for example -- he is a "value" investor but pretty darn aggressive. So, that isn't a good label to use...

The common thread is independence in thought process and discipline.

All of the managers I consider to be "exceptional" are very independent in their thought and investing process and stick to a discipline.

Just go back and read Bill Miller's annual letters to shareholders for the past decade and you will see what I mean. Smart, independent and disciplined. That is what I am most interested in.

Comment: Thank you for joining us today Chris! We have been speaking with Chris Edmonds, contributing editor, TheStreet.com.

CSEonTSC: Great to be with you all. Sorry for the delay. ... sometimes technology works and sometimes it doesn't.

See you all in a couple of weeks and, in the meantime, on TheStreet.com. Thanks to Sage, as always: Invest wisely!

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