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Personal Finance > Investing
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The Opportunist: Dick Weiss
Strong Opportunity Fund, portfolio manager
September 9, 2002: 6:18 PM EDT
By Suzanne Woolley, MONEY Magazine

NEW YORK (MONEY Magazine) - Posted speed limits are not what seem to guide Dick Weiss around the curves on the roads surrounding Santa Barbara, where he and wife Marybeth have a mountaintop avocado ranch.

It's not that Weiss, whose team at Strong Capital Management oversees $7 billion in assets, sets out to flout the law or that he speeds for the thrill of it. It's not a reflection of a tightly wound personality, either; in many ways, the California native is remarkably laid back.

It's just that when Weiss sets his mind on something, it temporarily crowds out everything else; occasionally that includes posted speed limits.

Such intensity has served longtime shareholders in Weiss' funds well. The Strong Common Stock Fund has outperformed two-thirds of its peers over the past 10 years, returning 12.7 percent annually, compared with the S&P 500's 11.4 percent return.

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And while the Strong Opportunity Fund, which Weiss has run since 1991, has had a rough couple of years, its long-term record remains solid. Its launch followed Weiss' 16-year run at Stein Roe & Farnham in Chicago, where the fund he managed racked up an 18.4 percent annual return over 10 years.

Richard Trent Weiss -- an ancestor founded Trenton, N.J. -- is a hard man to fit into a Morningstar style box. The Harvard M.B.A. does rigorous financial analyses yet has a lucky pencil and a lucky elephant-hair bracelet.

The stocks that Weiss invests in don't fit neatly into a category either, and he invests across a wide swath of sectors and market capitalizations. His method is a classic value approach, however, in that he drills down into a company's assets to determine what the entire company would be worth to a potential acquirer.

Then he watches, waits and buys when the stock is well below where he thinks it should trade based on his valuation. The discipline helps check any emotional thinking that might seep in after meeting with company management.

Opportunity in cable

The first stock that Weiss ever recommended was broadcaster ABC, back in the mid-1970s when he was at Stein Roe. His interest in media stocks has carried over to Strong, and he and Strong Opportunity Fund co-manager Ann Miletti have a long history of investing in media and cable stocks.

  graphic  Stocks to watch: Weiss  
  
Spinnaker Exploration
Apache
AOL Time Warner
Cablevision Systems
Comcast
Cox Communications
  

Cable holdings have hurt the fund's return recently, but today "the values in cable are better than I've seen in a number of years," says Weiss, and he's on the prowl.

The fund manager sees "enormous opportunity" in cable telephony. To buy into that trend, Weiss recommends Cox Communications, which trades at $23.

A year or so ago, many people would have said that Cox was spending too much on upgrading its cable network to offer telephone service. "But there's recognition now that they'll get an adequate return and that a lot of what they invested can be used when we go to voice-over-Internet Protocol," says Weiss.

Voice-over-IP involves transmitting calls over the same infrastructure that carries Internet data. Weiss predicts that a viable voice-over-IP product will be rolled out in late 2003 and move cable stocks dramatically.

"Unlike the rest of the cable industry, Cox has a really good balance sheet, and they have a good management team," adds Miletti. Cox would be Weiss' No. 1 pick in cable, but he also likes Comcast and Cablevision Systems.

"Comcast has been tainted by cable-industry credit-crunch problems," he notes, "but it has always run a conservative balance sheet, and it has very good management." Cablevision is a more controversial play. "Until management recognizes that the world has changed, that the cable industry is more mature and that credit availability is less, the stock could drift down," says Weiss. "But if management begins to do the right things, the stock could go up by multiples -- by three or four times."

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He also points to AOL Time Warner (parent of CNN/Money) as a good value. At $13, the stock trades at close to 13 times 2003 earnings estimates. "The company has its problems, but it generates a lot of free cash flow," he says. Miletti calls AOL "the cheapest entertainment stock out there, with a good mix of assets." The duo values the company's assets at around $31 a share.

A sector far removed from the media world also has Weiss' eye: energy -- and natural gas in particular. After the gas shortage of a couple of years ago, he explains, drilling spiked, but supply didn't come on like it had in the past. Then two warm winters hurt gas prices, the recession clobbered industrial demand and there were dramatic cutbacks in drilling. You'd think that would mean a supply crunch is in the offing, but storage levels may still be high because of last year's warm winter.

And if next winter is warm, a supply crunch may not develop for another year. "But for the longer term, energy is a good place to be," says Weiss. "We use it as our economic recovery play." He likes Apache as well as Spinnaker Exploration.  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.