Rich Werman, Neuberger Berman Select Equities Fund
Like other fund managers, Rich Werman and the management team of the Neuberger Berman Select Equities Fund (NBEAX) favor large-cap value stocks.
As of March 31, institutional shares of the Neuberger Berman Select Equities Fund have beaten the benchmark S&P 500 Index in 2011 and over the past one- and three-year periods. The fund shielded investors during the market downturn in 2008, climbing 1.1% since its December 2007 inception to the S&P 500's decline of 0.7%.The Neuberger Berman Select Equities Fund had 25 stocks as of Dec. 31 with an annual turnover of 126%. Werman says the fund's total net assets has climbed above $77 million from $68 million at the end of 2010. The fund has a heavy sector allocation to industrials, materials and energy, each accounting for more than 10% of the portfolio. For those with tax returns in hand looking for ideas, Werman says his team owns and recently bought shares of Hewlett-Packard (HPQ). Rather than the cost cutting that the company has done in the past under old management, Werman and his team expect the company to instead spend and reinvest back in the business. "New management believes they'll be able to earn in excess of $7 per share in earnings," Werman says from his New York office. "They're generating in excess of $800 million per month in free cash flow, and we think they're doing the right thing by buying back stock. They're buying up companies that have higher growth and higher margins, and they're not paying exorbitant amounts." Elsewhere, Werman says the portfolio has an investment in cell-tower operator American Tower (AMT), which saw its share price decline on news of the potential AT&T (T) merger with T-Mobile USA due to expectations there will be less of a need for more cell towers. Werman and his team, though, say the stock is attractive as the company transforms into a real estate investment trust, or REIT. "If you follow the REIT index, this will be a top five REIT and all the REIT funds will go out and buy the stock. It's like when a company is added to the S&P 500," Werman says. "So you'll have the REIT status and they're still growing internationally. They just bought towers in India, Ghana and South Africa, where they can apply their expertise to grow that business there." Lastly, Werman says he and his team have focused on Deere (DE) because of its agriculture business, as well as Teck Resources (TCK). Specifically, Werman notes that the company has a joint venture that will be an oilsands business, and it also is involved in metallurgical coal.
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