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Times are changing and it’s definitely time to get back to basics. That’s clearly the sentiment of Isaac H. Green, president and CEO of Piedmont Investment Advisors.
Green, who heads the $800 million Durham, North Carolina-based investment firm, likes to invest in context with what’s going on in business. “I am very reluctant to get that high-octane stuff out there for mass consumption,” he says. “I pay careful attention to the stock picking and keep it diversified so that it is the quality of those 35 stock picks that are driving the returns and not big bets on one part of the market or the other,” explains Green, who holds an M.B.A. from Columbia and manages $500 million of the firm’s capital responsibilities, predominantly in large-cap stocks.
Green’s first pick is conservative: Charlotte, North Carolina-based Wachovia Corp. (NYSE: WB). “Wachovia is a dominant company with a successful record of acquisitions and strength in asset management and investment,” says Green.
“Oil supply and demand is very tight, very high right now. There is also some geopolitical instability around oil production and oil supply. If we were to have any sort of a supply shortfall in oil, then prices could go higher. If we have a bear market because high interest rates coupled with high oil prices cause the economy to slow down meaningfully, you have to have some oil in your portfolio just to hedge the risk of high energy prices,” says Green. For that reason, he likes Halliburton Co. (NYSE: HAL), a company that provides a variety of services to engineering, construction, energy, industrial, and governmental customers. The Houston-based giant “has the edge since it does not own oil reserves like Exxon or Chevron, the big oil companies,” Green remarks.
It has been quite a year for AT&T Inc. (NYSE: T) with last year’s acquisition of SBC Communications. “This company is well-positioned to deliver broadband to homes. Even though the cable companies are out there, the environment is disciplined for pricing broadband, and so we think this company is well-positioned for the future with value-added services and a stable pricing environment. It’s a strong global player,” Green speculates.
Green likes PepsiCo Inc. (NYSE: PEP) because it is the dominant snack food company in the United States. “They are certainly benefiting from the fading of the low-carb craze. [PepsiCo] has been a well-managed, steady grower over the years. It’s also a good stock [to hold] in turbulent times because there is not a lot of cyclicality in their growth rate, so if there is an economic slowdown, I think PepsiCo will weather it very well.”
The success of the iPod helped transition Apple Computer Inc. (Nasdaq: AAPL) from a computer manufacturer with a shrinking marketplace to a top-tier consumer electronics manufacturer. The big question for Apple is, “Will they be able to leverage the iPod brand more broadly?” says Green. Apple is also introducing a new iPod-branded desktop computer with a high-speed Intel processor that is closing the performance gap between it and other desktops. Green
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