Finding
Value In
A Highly Volatile Market
John
Zaro, Managing Partner, Bourgeon Capital Management, is finding
value in the following sectors of the market:
Basic Industries -- Because
of the cyclical global recovery, chemicals, metals and machinery
represent some of the best bargains in the market today. Stocks
with the greatest upside potential: Dupont, Reynolds Metals,
Potash and Solutia.
Energy
-- Skyrocketing
prices, high demand and tight inventories make oil companies
solid plays. BP/Amoco, Exxon/Mobil, Devon Energy and Texaco favored.
Financial
-- The greatest
value: insurance companies and select banks. BCM likes AIG, expects
a turnaround at Berkshire Hathaway and sees upside in St. Paul.
On the banking side, Citigroup and Bank of New York are solid
bets.
Entertainment -- The
payoff is in content development, destinations, the Internet
and interactivity. News Corp, Disney, Fox and Liberty Media look
good short- and medium-term; may trim some holdings later in
2000.
Technology
-- BCM sees
value in good growth companies focusing on the Internet, broadband
and telecom. Solid bets: IBM, Microsoft, Level 3, Philips Electronics
ADR and Internet specialist, Novell.
Healthcare
-- Pharmaceuticals,
which have been pummeled recently, are undervalued and provide
buying opportunities. Hospitals, despite recent problems, also
look promising.
Food/Consumer Products -- With
limited pricing power, a troubled sector. Potential value plays:
Coke (in turnaround), Procter & Gamble and Colgate.
Editor's Note: John
Zaro is Managing Partner, Bourgeon Capital Management, a New
York-based investment firm that manages the assets of high net
worth individuals and their families. Mr. Zaro is a Former Partner,
Warburg Pincus and Former Sr. Portfolio Manager, JP Morgan. Bourgeon
Capital Management, LLC recently launched a new hedge fund called
Bourgeon Partners, L.P. The Fund invests primarily in equities
of U.S. publicly traded companies. It holds positions that represent
specific themes, both economically and politically, in the U.S.
and abroad. Potential areas for investment include technology,
communications, data transmission via broadband technology, healthcare,
media and oil and gas. For more information about Bourgeon Partners
and Bourgeon Capital Management, contact John Zaro at (212) 984-6208.
