Some people fear change, but at least one fund manager views it as an opportunity.
"We look for some form of change in a company," says Matthew Kaufler, co-manager of the five-star rated
Touchstone Value Opportunities Fund
. "It could be internal, like a management change, or external, such as a change in regulations or technology. Either way, the best time to capitalize on a stock is when it is evolving."
For all his talk of change, Kaufler's fund has been a steady performer, averaging 18% annually over the last five years, 6.5 percentage points better than the
. Year-to-date the fund, which holds only 43 stocks, is down 3.2%, according to
, compared with a loss of more than 6% for the index.
One of his star performers has been Houston-based
Cabot Oil and Gas Corporation
, up 33% since the start of the year. Kaufler says the external environment for natural gas is changing. Prices are headed upward as a result of increased demand due to new power plants coming online and the Canadian government raising taxes on domestic production.
Kaufler says Cabot is also in a favorable position on the supply side because of its claims on the gas-rich Marcellus Shale reservoir in the Appalachian region.
"Cabot has extensive Marcellus shale exposure, but it has been underreported" in the press, says Kaufler. "This area has huge potential. It's a game changer."
Kaufler sees internal change has the catalyst to move long-dormant shares of
"The time has come for Time Warner," says Kaufler. "They have new leadership in Jeff Bewkes, and splitting off the cable company gets them back to basics."
He is also counting on the company to monetize another languishing asset in
. He believes management will soon sell off the diminishing dialup business. As for the more valuable portal business, Kaufler is confident that management will be in a position to make a move as of July 1, which is the first day
can potentially cash in on the deal it made for a 5% stake in AOL.
Dayton Power and Light
as a more traditional value name. He forecasts the company earning $2 a share in 2008 and up to $2.50 in 2009. DPL boasts a healthy -- and safe -- 4.2% dividend yield.
"The patient investor has a dividend to keep them warm, visibility on near-term earnings progression and
the company has a recession-resistant business profile," says Kaufler. "Its also a viable acquisition candidate for the likes of
American Electric Power
Slow and steady winning the race? Some things never change.
Before joining TheStreet.com, Gregg Greenberg was a writer and segment producer for CNBC's Closing Bell. He previously worked at FleetBoston and Lehman Brothers in their Private Client Services divisions, covering high net-worth individuals and midsize hedge funds. Greenberg attended New York University's School of Business and Economic Reporting. He also has an M.B.A. from Cornell University's Johnson School of Business, and a B.A. in history from Amherst College.