Blogs & Comment

Maximum pessimism (III)

Here is the third, and final, part of my interview with Lauren Templeton (see Part Iand Part II), founder of Lauren Templeton Capital Management LLCand niece to legendary investor Sir John Templeton. In this part, I ask her for some perspectives on the current investing environment and possible investment opportunities.
Regarding the current investing environment:
The current investing environment is dominated by pessimistic macro-related headlines, but for those looking at the market on a bottoms-up basis the picture is much healthier. In other words, while sovereign balance sheets roiled the market during the past couple of months, we believe corporate balance sheets are as healthy as they have been in the past 50 years.”
“Also, in addition to remaining healthy, companies are performing well from an earnings standpoint. So while everyone is obsessed with the prospects of the broader economy and the possibility of a double-dip recession (which is impossible to predict with any accuracy) those investors who are focusing more on the bottoms-up picture should be more optimistic.”
“Finally, in many cases, valuation metrics such as P/Es are being somewhat distorted by the heavy cash balances, and many firms are trading at lower P/Es than they appear after backing out these extraordinary cash balances.
Regarding possible investment opportunities
We believe there are select opportunities in the market from the bottoms-up view such as high quality multinational companies, i.e. Walmart (currently at an all time low P/E), Johnson and Johnson, as well as companies in the energy space, such as the oil services and drilling firms, several of which were connected to the Gulf, i.e. Transocean. We believe that looking at these names from a long-term perspective they have many opportunities for growth and a healthy fundamental backdrop.