Morningstar Advisor - October/November 2011 - (Page 18)

Investments à la Carte Four Picks for the Present Stock: J.P. Morgan Chase & Co JPM Fair Value Estimate $61 Morningstar Rating Uncertainty High Economic Moat Narrow Credit Rating A+ QQQQQ 1-Year Stock Price Compared With Fair Value Estimate 70 Daily stock price Fair value estimate 35 9/1/10 12/1/10 3/1/11 6/1/11 J.P. Morgan is well positioned to meet oncoming challenges and exceed expectations. The company’s disciplined approach and conservative capital base leading up to the financial crisis allowed it to effectively weather that storm, and it is now taking action to reward shareholders. J.P. Morgan recently increased its dividend and instituted a giant share buyback program, all while making the necessary changes to meet future requirements. The bank also has a proven crisis leader at the helm in Jamie Dimon. All of this hasn’t convinced the market—on Aug. 23, the stock was trading at less than book value and a 45% discount to our fair value. David Hirsch Mutual Fund: Thornburg International Value TGVAX Category 7 Foreign Large Growth Asset Allocation Cash US Stock Non US Stock Bond Other Morningstar Rating QQQQ Total Assets $7.5 billion Expenses 1.33% Turnover 22% Assets in Top 10 Holdings 22.88% –100 –50 0 50 100 This is no standard-issue value fund. Lead manager Bill Fries, along with comanagers Wendy Trevisani and Lei Wang, have long invested in a mix of value plays, steady growers, and emerging franchises. Lately, valuations have led them to emphasize the 70 latter group, pushing the fund from Morningstar’s foreign large-blend category to foreign 35 large-growth. They’ve also been buying larger firms of late for valuation reasons; its average market capitalization is one of the category’s highest. While the fund sometimes has a well-above-average stake in emerging markets, the managers have stuck with well-established companies in those markets and the fund’s Value - Daily Fair volatility has been relatively low. Greg Carlson Daily Closing Price Separate Account: Montag & Caldwell Equity Category 7 Large Growth Asset Allocation Cash US Stock Non US Stock Bond Other Total Number of Holdings 34 P/B Ratio 3.46 U.S. Stocks 98.02% 0 9/1/1010/25/1012/27/102/23/114/15/116/6/117/25/11 9/2/1010/26/1012/28/102/24/114/18/116/10/118/1/11 in Top 10 holdings 9/3/1010/27/1012/29/102/25/114/19/116/13/118/2/11 9/10/1011/2/1012/30/102/28/114/20/116/14/118/3/11 9/7/1010/28/1012/31/10 3/1/11 4/21/116/15/118/4/11 9/13/1011/3/10 Minimum3/3/114/25/116/16/118/10/11 9/8/1010/29/10 1/3/112/22/114/14/116/3/117/22/11 9/14/1011/4/10 1/4/11 3/2/11 4/26/116/17/118/5/11 9/9/10 11/1/10 1/10/11 3/4/11 4/27/116/20/118/11/11 9/15/1011/10/101/5/11 3/10/115/2/116/21/118/12/11 9/16/1011/11/101/11/11 3/7/11 4/28/116/22/118/15/11 9/17/1011/12/101/6/11 3/11/115/3/116/23/118/16/11 9/20/1011/15/101/12/11 3/8/11 4/29/116/24/118/17/11 9/21/1011/16/101/13/11 3/14/115/4/11 6/27/118/18/11 9/22/1011/17/101/14/113/9/11 5/10/11 7/1/118/19/11 9/23/1011/18/101/18/11Investment5/24/117/18/11 9/24/1011/19/101/19/113/15/115/5/11 6/28/118/22/11 9/27/1011/22/101/20/113/16/115/11/11 7/5/118/23/11 9/28/1011/23/101/21/113/17/115/6/11 6/29/118/24/11 9/29/1011/24/101/24/113/18/115/12/11 7/11/118/31/11 9/30/1011/26/101/25/113/21/115/9/11 6/30/118/25/11 10/1/1011/29/101/26/113/22/115/13/117/6/11 Assets 10/4/1011/30/101/27/113/23/115/16/117/12/11 9/1/11 10/5/10 12/1/10 1/28/113/24/115/17/117/7/11 8/26/11 10/11/1012/10/102/3/113/25/115/18/117/13/11 10/6/10 12/2/10 1/31/113/28/115/19/117/8/11 8/29/11 10/12/1012/13/102/4/113/29/115/20/117/14/11 10/7/10 12/3/10 2/1/11 3/30/115/23/117/15/11 10/13/1012/14/102/10/114/1/11 5/25/117/19/11 10/8/10 12/6/10 2/2/11 3/31/115/26/117/20/11 10/14/1012/15/102/11/114/4/11 5/27/117/21/11 10/15/1012/16/102/14/114/5/11 5/31/117/26/11 10/18/1012/17/102/15/114/11/116/1/11 7/27/11 10/19/1012/20/102/16/114/6/11 6/2/11 7/28/11 10/20/1012/21/102/17/114/12/11 6/7/11 7/29/11 10/21/1012/22/102/18/114/13/11 6/8/11 8/8/11 10/22/1012/23/10 11/5/10 1/7/11 11/8/10 11/9/10 12/7/10 2/7/11 4/7/11 6/9/11 8/9/11 12/8/10 2/8/11 4/8/11 12/9/10 2/9/11 8/30/11 $25,000 41.13% –100 –50 0 50 100 This fund seeks a select list of the biggest fish in the pond. It typically holds just 30 to 35 stocks, and its average market capitalization is consistently well above the large-growth category norm. Veteran lead skipper Ron Canakaris and his team look for giant firms that crank out relatively stable revenue streams and are undervalued relative to their growth prospects. The fund has generally held up better in tough times than most peers and lagged in rallies led by cyclical fare. As a result, it’s produced fine risk-adjusted returns over the long haul. It’s lost less than most of its peers in August’s turbulent market, and it’s an attractive play on the market’s behemoths, which are arguably still undervalued. Greg Carlson 18 Morningstar Advisor October/November 2011

Table of Contents for the Digital Edition of Morningstar Advisor - October/November 2011

Morningstar Advisor - October/November 2011
Contents
Contributors
Letter From the Editor
The Emotional Burden
Where Are You Going for Yield?
Ahead of the Curve
How to Use a ‘Collar’
Why Dividends
Is Bond Investing All Uphill From Here?
Four Picks for the Present
Investment Briefs
The Risks of Stretching for Yield
For Banks, Uncertainty Reigns
The Virtues of Dividends
How Well Do You Know Templeton Global Bond?
The Case for Dividends in Emerging Markets
Finding Refuge in Value
Swift, Smooth, and Silent
Crack Open Closed- End Funds to Avoid the Relevance Paradox
Getting Beyond Labels in the ‘To vs. Through’ Debate
Handling the Headwinds
Bonds, Short-Term Bonds
Mutual Fund Analyst Picks
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
A Prisoner of Pricing

Morningstar Advisor - October/November 2011