The largest of large-cap stocks are now the most attractive investments in the market, says Jim Kieffer, managing director of Artisan money management firm.
Among the mega-cap stocks that he likes are Apple and Microsoft.
Kieffer and his fellow managers at Artisan’s three U.S. value funds were named 2011 domestic stock manager of the year by Morningstar.
So why are mega-cap stocks the most undervalued segment of the market? Fund flow plays a role, he tells Steve Forbes, chairman of Forbes Media.
“Money has been flowing out of equity funds for a number of years now, particularly large-cap-oriented funds,” Kieffer says. “On the flip side there’s been a lot of money that’s gone into hedge funds. Hedge funds tend to use small-cap names as more of their playground than the large-caps.”
Artisan bought Apple when it slumped last spring. “This is a company on the cusp of accumulating $100 billion in cash,” Kieffer says. “This is a company at selling at low teens. This is a company that has very dominant products that are actually early in their growth acceptance.”
As for Microsoft, “I don’t think most people appreciate that it’s still growing,” he says.
Richard Helm, head of the large-cap value investing team at Cohen & Steers, likes dividend plays among large-cap stocks.
“You will see more companies paying dividends this year and more companies hiking those payments,” he tells Barron’s.
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