David Rappa was my guest on MoneyMasters today. He is a portfolio manager with Austin Investment Management. That's a relatively small investment management firm that specializes in global equities. Austin manages about $300 million. Most of that is in separately managed accounts, but it also runs a mutual fund with about $50 million.
Austin uses an intrinsic value approach to finding stocks. Rappa told me he is particularly bullish on pharmaceuticals right now. Over lunch we also talked about Boston Scientific (BSX), one of his new holdings. BSX is a stock I've owned on and off since 1992. It's been one of my biggest money makers. I don't have a position in the stock right now, but I have to admit, I am getting tempted once again. Rappa started buying it not too long ago. The stock is currently around $17-18 per share, down from its 2004 high of about $46. The sell-off is due to reports of problems with drug-coated stents and the company's acquisition of Guidant. BSX paid too much for Guidant. It seems BSX was more interested in keeping Guidant away from Johnson & Johnson (JNJ) than it was in actually acquiring the company itself. Perhaps recent strength in shares of BSX indicate that investors believe the sell-off has gone far enough.
My MoneyMasters interview with David Rappa will be posted Jan. 25. This Thursday, Jan. 11, we will post my interview with David Frankel of firstRain, a research firm.