Morningstar Advisor - June/July 2012 - (Page 20)

Investments à la Carte Four Picks for the Present Stock: Covidien COV Fair Value Estimate $76 Morningstar Rating Uncertainty Medium Economic Moat Narrow Avg. Credit Quality Unrated Market Cap $26 billion QQQQ YTD Stock Price Compared With Fair Value Estimate Daily stock price Fair value estimate 80 (Gaps indicate when fair value estimate was under review.) 60 5/2/11 8/2/11 11/2/11 2/2/12 After a few years of investing in research and development, bolstering its salesforce, and pruning its product lineup, Covidien has returned to prominence in the medical-device arena. The company’s strong product pipeline, a management team dedicated to maximizing returns on investment, and favorable secular trends bode well for its prospects. The company established a strong moat around its business, particularly in devices, and represents a compelling long-term investment opportunity. Covidien built its device business on its technological know-how and distribution network, which resulted in leadership positions across most of its product categories. As long as the company doesn’t fall too far behind in its technology, it is essentially assured a steady market share and growth. Alex Morozov Mutual Fund: Janus Triton JATTX Category 6 Small Growth Asset Allocation Cash US Stock Non US Stock Bond Other Investment Style 6 Small Growth Morningstar Rating Morningstar Analyst Rating QQQQQ Expenses 0.93% Total Assets $3 billion –100 –50 0 50 100 This small-growth fund has been on a roll lately. In the past, that might have been a red flag for a Janus fund, but this one has become a success by focusing on sturdy companies rather than taking big risks. Managers Chad Meade and Brian Schaub started their careers at Janus during the firm’s brutal performance in the 2000–02 bear market. As a result, they stick with companies that possess sustainable competitive advantages and trade at undemanding valuations. The fund has excelled during their six-year tenure, shining in both rallies and choppy markets. A modest 0.93% expense ratio seals its appeal. Greg Carlson 80 5/10/10 9/10/10 1/10/11 60 Minimun Investment $50 million Number of Holdings 72 Total Assets $15.5 billion Separate Account: Invesco Large Cap Value Category 1 Large Value Asset Allocation Cash US Stock Non US Stock Bond Other Investment Style 1 Large Value Morningstar Rating QQQ –100 –50 0 50 100 This account has changed names since Invesco acquired Van Kampen in 2010, but it’s been run by the same management team for a long time. Lead skipper Kevin Holt, for example, has been a manager on the team since 1999. The managers have steered the mutual fund Invesco Van Kampen Comstock ACSTX to solid long-term returns using a deep-value, 5/2/11low7/19/119/6/1110/27/1112/28/112/2 5/3/116/21/118/12/1110/10/1112/5/111/25/13 5/4/116/22/118/15/1110/11/1112/6/111/26/1 5/10/11 7/1/118/19/1110/17/1112/15/112/6/1 5/5/116/23/118/16/1110/12/1112/12/112/1/1 5/11/11 7/5/118/22/1110/18/1112/16/112/10 5/6/116/24/118/17/1110/13/1112/13/112/2/1 5/12/11 7/11/118/31/1110/28/1112/29/112/ 5/9/116/27/118/18/1110/14/1112/14/112/3/1 5/13/117/6/118/23/1110/19/1112/19/112/13 5/16/117/12/11 9/1/1110/25/1112/23/11 2/ 5/17/117/7/118/24/1110/20/1112/20/112/14 5/18/117/13/11 9/2/1110/26/1112/26/11 3 5/19/117/8/118/25/1110/21/1112/21/112/15 5/20/117/14/11 9/12/1111/3/1112/30/11 5/23/117/15/11 9/7/1110/31/11 1/2/12 5/24/117/18/11 9/8/11 11/1/11 1/3/12 5/25/117/20/119/14/1111/4/11 1/4/12 5/26/117/21/119/9/11 11/10/11 1/10/12 5/27/117/25/119/15/1111/7/11 1/5/12 5/31/117/26/119/16/1111/11/11 1/11/12 6/1/11 7/27/119/19/1111/14/111/6/12 6/2/11 valuations 11/8/11 1/12/12 6/3/11 7/28/119/20/1111/15/111/9/12 6/10/118/1/119/21/1111/16/111/13/12 6/7/11 7/29/119/22/1111/17/111/16/12 6/13/118/2/11 9/23/1111/18/111/17/12 6/8/11 8/3/11 9/26/1111/21/111/18/12 6/14/118/4/11 9/27/1111/22/111/19/12 6/9/11 8/10/1110/3/1111/28/111/23/12 6/15/118/5/11 9/28/1111/23/111/20/12 6/16/118/11/1110/4/1111/29/111/24/1 6/17/118/8/11 9/29/1111/24/11 1/27/1 6/20/118/9/11 9/30/1111/25/11 1/30/1 6/28/11 8/26/1110/24/1112/22/112/1 6/29/11 8/29/11 11/9/11 6/30/11 8/30/11 10/5/1111/30/11 1/31/1 10/6/11 12/1/11 2/7/ 10/7/11 12/2/11 2/8/ 12/7/11 2/9/ 12/8/11 12/9/11 low-turnover strategy that prizes6/6/117/22/119/13/1111/2/1112/27/112/2 and turnaround stories. While this portfolio can have a cyclical bent at times, the managers have kept it out of deep trouble by limiting stock-specific risk and making prudent calls, such as avoiding most big banks going into the financial crisis of 2008. Greg Carlson 40 20 Morningstar Advisor June/July 2012

Table of Contents for the Digital Edition of Morningstar Advisor - June/July 2012

Morningstar Advisor - June/July 2012
Letter From the Editor
Be Worth Remarking About
How Important Is Stewardship?
From West Point to Points East
Where a Fund’s Secrets Lie
Getting Fund Directors on Board
Managers Prep for Housing Rebound
Four Picks for the Present
Investment Briefs
A Hedge Against Career Risk
Natural Gas Reaches Capitulation
Family Matters
How Good Stewardship Predicts Superior Performance
Stewardship Goes Back to the Fundamentals
On the Go for Fixed Income
Where Shareholders Ride First Class
Dangers Lurk in Exchange-Traded Notes
Stocks on Sale in a Strong Market
A Good Steward Is Easy to Find
Our Favorite Mutual Funds
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
Buffett Rule’s Biggest Losers

Morningstar Advisor - June/July 2012