November 26, 2009 — The Wall Street Transcript has just published TWST Investing Strategies Report offering a timely review of the Diversified Investments sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.

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John D. Kattar, CFA is Chief Investment Officer at Eastern Investment Advisors. Prior to joining Eastern in 2005, Mr. Kattar was Managing Partner at Ardent Asset Management, a hedge fund management and consulting firm. He has been Director of Growth Equities at Mellon Financial, Director of U.S. Equities at The Boston Company, and has also held senior investment positions at Phoenix Investment Partners and Baring Asset Management.

TWST: Would you tell us about some of the stocks you have bought over the past year that you feel are representative of your firm’s investment approach?

Mr. Kattar: I’ll take it by sector, starting with tech and energy, which I mentioned before are overweights. Apple (AAPL) is a name that we’ve owned for longer than a year, but we continue to like it a lot. This is obviously one of the best-managed tech companies with a powerful brand, great products and huge momentum. What is interesting is that the major growth drivers for this company — Mac and iPhone — are in markets where AAPL’s addressable market dwarfs their current market share despite their huge success to date. Adjusted for their huge cash position, the stock is not horribly expensive and sells at a pretty significant discount to its growth rate.

Google (GOOG) is another name that we like in technology. The big story here is mobile search and video, both of which are enormous markets. Google is right at the beginning of growth curves in these markets that will one day rival their base business in search. These are tremendous opportunities that we believe are being underappreciated by the market.

In terms of more value-oriented stocks within technology, we liked semiconductors. The group has not performed very well despite pretty good fundamentals and rising earnings estimates. We’re getting more interested as we think the stocks are cheap and the fundamentals are improving. Our one concern is that semiconductors have not reacted well to generally solid earnings reports in the most recent quarter. That’s generally not a good sign. But we believe this is a short-term phenomenon and semis are going to do well longer term.

One energy name that we have recently purchased is Apache (APA). Valuation on its reserve base looks very inexpensive relative to other energy producers. We like the production mix between oil and gas, as well as international versus domestic. They also have good longer-term exposure to growth markets like LNG. Talisman (TLM) is another name that we like. This is a high-cost Canadian turnaround story that is moving to lower-cost shale plays. In the current environment of firm oil pricing, their relatively high cost is not such a disadvantage, as it provides them with higher leverage to increasing energy prices.

In industrials, two names that we like are Danaher (DHR) and Roper Industries (ROP). They are actually similar companies although in different industries. Both are high-quality growth cyclicals in attractive markets with good organic growth rates, but growth is augmented by a steady acquisition program. We believe that the current deal environment is terrific because the lingering effects of the credit crisis have decreased prices of attractive acquisition targets. Both companies are seeing lots of opportunities for deals that are both inexpensive and good strategic fits. We think it’s a perfect environment for DHR and ROP.

In consumer staples, Bunge (BG) is one of our favorite players. BG is both an agriculture processor as well a fertilizer company. As I mentioned before, agriculture is one of our favorite long-term sectors. Agribusiness is the largest part of BG’s revenues, but fertilizer is the largest short-term driver of profitability. This market is currently very depressed, but as it recovers over the next 12 months, the earnings power of this company will absolutely explode. We are neutral-weighted in financials, and have a particular emphasis on quality. JPMorgan (JPM) is a good example of this. They are benefiting from the decreased competition from firms that have either disappeared or been severely weakened. This is the best run, best capitalized large bank in the country and will be a prime beneficiary of the ongoing recovery in the financial system.

Ameriprise (AMP) is a recent addition and combines great earnings momentum with excellent valuation. It recently acquired the money management unit from Bank of America (BAC) in a distressed sale. Ameriprise looks to have bought it very cheaply, and the deal is extremely accretive. In addition, they have lots of opportunities to rationalize that business and to make further acquisitions.

JOHN D. KATTAR

Eastern Investment Advisors

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