Which Sectors, Companies Will Continue to Benefit From the Recovery?
You don't want to be in stocks where the expectations have been modeled...you want to find the companies that can still surprise to the upside when they report earnings.
Gregg Early: I'm here with Michael Sansoterra, Managing Director of Silvant Management and portfolio manager of RidgeWorth Investments Large Cap Growth Fund (MUTF:STCIX).
Michael, it looks like the recovery seems to be...it's not moving backwards, I guess would be the most realistic way to put it. The newest numbers came in and they look fairly strong. What do you see in the marketplace? What sectors do you see that are going to most benefit from this continued recovery?
Michael Sansoterra: You're right. We've seen the fundamentals of the economy continue to bump along in this somewhat slow recovery, and that continues. Unfortunately, it hasn't been enough to get folks very excited about a lot of asset classes-equities in particular-but it is still constructive and that's to your point.
The first thing you need to see is what direction the wind is blowing. The wind appears to still be blowing in slow recovery, some growth, not particularly robust; but also not rolling back over and giving investors some hope that down the road things can get a little bit better.
At Silvant Capital Management, and in the RidgeWorth Large Cap Growth Fund in particular, we are always looking for companies that could exceed investor expectations. These companies typically have good secular trends; they are growing and taking market share. They have some pricing power. They are disrupting the markets they're in.
On a company-by-company basis, we can find more of those companies right now in technology and consumer discretionary, and even a little bit in health care as well. It's not robust growth-like we said, we're in a period where it's a relatively fragile recovery, and it continues to be fragile.
There are still companies taking market share, there are still some folks with pricing power, and we want to be invested in those types of companies. Again, technology, some in consumer discretionary, and some in health care, is where we are seeing the most of those types of firms.
Gregg Early: Now, in the health-care sector, are you looking at the health-care technology aspect of it, going electronic with all the medical records? Or are you looking more in the space of health-care facilities and insurers?
Michael Sansoterra: We look more in technology. We have companies like Cerner (NASDAQ:CERN) in the portfolio.
Cerner is an IT company based in health care that helps doctors and hospitals cross-reference patient material, electronic recording of that information. That's a relatively new business, and we've had a lot of companies try to expand into this business, but the ultimate paperwork of hospitals and doctors' offices is still decidedly done manually and really not automatically.
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