Whitney George on Two Domestic Stock Picks by Royce Funds
Portfolio Manager and Managing Director Whitney George talks about why he currently likes digital and analog chip maker Cirrus Logic, Inc. (NASDAQ:CRUS) and real estate asset manager Kennedy Wilson.
Whitney George feels comfortable with Cirrus Logic
“One stock that we feel pretty comfortable with right now is Cirrus Logic. They’re in the digital and analog chip business, specializing in sound. They make the highest quality chips within their industry and have a leading position.
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“The knock on the company is that Apple Inc. (NASDAQ:AAPL) is an 80% customer. That poses risks on one hand, but on the other hand it’s a good indication of the strength of their technology because you couldn’t get there without that, and I think this year—with Apple introducing whole new products, some which we all know about, some which we probably don’t—Cirrus is going to surprise a lot of investors by the strength of their results. Expectations are very low. The company has a great balance sheet, buys back stock, has fantastic technology, and is in the process of acquiring their major competitor.
Whitney George also likes Kennedy-Wilson
“Another name that we like and have liked for a long time—in fact owned at the firm since 2002—is a company called Kennedy-Wilson Holdings Inc (NYSE:KW), which is in the asset management business.
“What they do is buy distressed real estate. They did it very successfully in the S&L crisis here in the early ’90s. They did it very successfully in Japan in their real estate collapse. They’ve been doing it very successfully here on a grander scale in the last five years, in California in particular, and now are very active in Europe. In fact, they just launched a $1 billion Euro fund in February which they will manage and collect fees on, and also co-own to buy distressed real estate as the banks restructure.
“I think this is a very underappreciated real estate asset manager. I think it’s a company that could be discovered in the next year based on the tremendous opportunity in front of them and the results they’ve already generated.”