Like many value investors, Brandywine Global Asset Management's Scott Kuensell is a glass is half-full sort of person. After all, the 53-year-old Philadelphia native makes his living seeing hope in companies that other investors consider hopeless. That strategy has paid off with picks like McDonald's Corp., which Brandywine recently sold at a tidy profit. The company now is betting that good times will come to companies that have been stuck in Wall Street's doghouse: Dell Inc., Wal-Mart Stores Inc. and Comcast Corp. Recently relocated from Wilmington to Philadelphia, Brandywine manages $42 billion and is a unit of Wall Street behemoth Legg Mason Inc. Kuensell took time out this week to speak with PhillyInc:
PhillyInc: Are there still bargains to be had at a time when the markets keep breaking records? Kuensell: "The valuations are nowhere near an all-time high. As a matter of fact, we think stocks are quite reasonably priced."Q: Even in the tech sector?
A: "Tech stocks in our opinion are the most attractive. As value investors, often times we gravitate to stocks that have hit bumps in the road." (such as Dell Inc. and Intel Corp.)Q: Will Dell, which recently reported better-than-expected results, improve now that founder Michael Dell has returned as CEO?
A: "Nothing is perfectly analogous, but when Steven Jobs returned to Apple, good things happened."Q: Isn't competition with Advanced Micro Devices still hurting Intel?
A: "It looks like the price war is subsiding. (Competition) is not nearly as cutthroat as it was 15, 18 months ago. When we bought Intel, the crowd was proclaiming AMD as the new king." [Editor: Intel shares are up 11% this year while AMD has plunged almost 30 percent.]Q: Have any of your picks turned out especially well?
A: "When we bought McDonald's, the news couldn't have been more negative -- mad cow disease, the super-size movie, CEOs dying in office. … There was a host of things. The company was expanding at too fast a rate. (Since then) they terminated relationship with franchisees who didn't know how to use a mop."Q: What about Wal-Mart?
A: "That's one of our largest holdings. Most of the press is negative about Wal-Mart at an array of subjects. ... The opportunity for Wal-Mart is that (higher-income shoppers) only buy soap and paper towels and garden houses. They are not buying furnishings and apparel."Q: Do you agree with Wall Street's negative view of Comcast?
A: "In our opinion, Comcast had a entered sweet spot where cash generation is going to grow significantly. … We're particularly excited about the opportunity that the company has in the small and mid-size businesses. They haven't even scratched the surface."
