TOM HUDSON: U.S. investors should not be obsessing about Europe. Instead,
tonight`s “Market Monitor” says think big, as in stocks of big companies.
John Dorfman, there he is. He`s chairman of Thunderstorm Capital with us
tonight from Boston. John, great to see you and welcome back.
JOHN DORFMAN, CHAIRMAN, THUNDERSTORM CAPITAL: Great to see you again.
HUDSON: Why shouldn`t we be concerned about Europe`s problems being
imported here to the U.S. for shareholders?
DORFMAN: People are pretty terrified about Europe right now. I`m not
saying they shouldn`t be concerned. What I am saying is the concern is a
bit excessive at this point. For example, look at trade. Our biggest
trading partners are Canada, China, Mexico and Japan in that order. And the
next biggest is Germany at 4 percent of our trade. Europe all together is
less than 20 percent of our trade. So the chances that we will import a
recession from Europe in 2012 I think are pretty small.
HUDSON: John, the worrywarts will say though it is a globally
interconnected world and about half of S&P 500 company earnings come from
overseas, not just Europe but all of overseas and what happens in Europe
could trickle down to China and that could certainly hurt the United
DORFMAN: Yeah, there are a number of pathways of contagion that could
happen. I just don`t think they are really likely to happen. I think people
underestimate the importance of Asia nowadays and a little bit overestimate
the importance of Europe.
HUDSON: Let`s take a look at some of your stock picks here with that
as a strategy, beginning with General Motors (NYSE:GM), GM. Interesting
pick for you. You usually like mid and small caps but here you`ve got a big
cap at $25 per share. Buying it now you get it at a bargain compared to the
IPO price of last year when it was in the low 30s. What do you expect out
DORFMAN: There`s not much euphoria in GM`s stock any more but here`s
a company that is going to benefit from an old-fashioned economic cyclical
recovery that seems to me to be gathering some steam here in the U.S. up to
14 million cars and trucks sold. That`s the annual pace now and that`s
really going to help GM.
HUDSON: So you are buying this really for the domestic exposure in
the United States, the necessarily the Asia business.
DORFMAN: Primarily for the domestic exposure here in the U.S. and I
think those people have a legacy, bad feeling about GM. It`s got a better
balance sheet that solves some its problems.
HUDSON: I wouldn`t have taken you for a fan of the “Shrek” movie
franchise but you like Dreamworks Animation, DWA, at $18 per share. It`s
about half the price it was a year ago.
DORFMAN: Yes, are you kidding, Tom I love “Shrek,” but actually the
price reflects the fact that investors think they will never have another
“Shrek.” “Pus N Boots” is not “Shrek” and “Kung Fu Panda” is not “Shrek,”
but they will have another big hit and they`re selling at an incredibly low
multiple, four times earnings. So that`s why I like it.
HUDSON: You`re also going overseas in Hong Kong, a construction,
engineering and real estate firm, Jardine Matheson. It`s a pink sheet
stock here, JMHLY, the ticker symbol. Why international?
DORFMAN: Well, I always have some of our clients` money in
international. And it`s a diverse play on the Asian economy where the
populations are younger. The economies are growing faster. The government
deficits are less. There are several reasons to like Asia and Jardine is
just all over the region in the businesses you named and quite a few other
businesses as well.
HUDSON: Real quick though, it`s got some property exposure and there
has been concern about Asia property prices, perhaps too high?
DORFMAN: There has been periodic concern about Asia property prices
but Jardine has more than 20 consecutive years of positive earnings and I
think it`s going to weather the ups and downs quite well.
HUDSON: OK. Last time we saw you was the first of July, last summer.
You had four picks beginning with Newmont Mining (NYSE:NEM) up about 10.5
percent, well done. Cliff Natural Resources, the steel stocks have been
hit. This has been hit by about 24 percent. You also liked Leucadia, a
conglomerate of sorts, financial conglomerate, off by more than 20 percent
and Johnson & Johnson (NYSE:JNJ) down 3 percent. Do you still like any of
these four given their performance?
DORFMAN: I actually still like it own each and every one of them.
HUDSON: What about the previous trio we mentioned? You have
positions in those as well?
DORFMAN: Yes, we do.
HUDSON: A “Shrek” fan, let it be noted here tonight with our Friday
“Market Monitor.” It`s John Dorfman. He joins us from Boston from