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One of the rare African American hedge fund managers, Bill Thomason says he likes to assess company management face-to-face before committing a cent of his money. Thomason, head of Thomason Capital Management in Oakland, California, says it’s even more important to gauge the mind-set of CEOs, particularly in light of the accounting and management scandals during much of 2002. “No matter how good a business is,” says Thomason, “its success or failure is going to come down to a human level. That’s why I want to know as much as I can about how the people in the top spots think and how they plan to make my company — my stock — appreciate in value.”
That said, Thomason supervises about $20 million in an institutional retirement plan fund and two hedge funds. He describes himself as a value investor who gravitates toward stocks that have a good chance of growing earnings 20% or more, provided their price-to-earnings multiple isn’t much higher than their growth rate. “When I look for a stock, I hunt for industries that have been beaten down and then search for the best-run companies in the group,” says Thomason.
Thomason’s first Private Screening pick is Stryker Corp. (NYSE: SYK), a medical device maker with a specialty in orthopedic implants. He has the utmost respect for Chairman, President, and CEO John Brown, a leader who has made a point of keeping shareholders happy. “He is frugal, both in his personal lifestyle and in how he runs his company. He keeps costs in check,” says Thomason. The company has a good name and is a leader in the medical equipment market.
Thomason describes the biotech stock Trimeris Inc. (Nasdaq: TRMS) as a thrifty play in the burgeoning market for AIDS treatments. “Their pipeline of new medications is considered the best in the HIV space by those few analysts I feel know what they’re doing.”
Thanks to the 2001 tech wreck, Synaptics (Nasdaq: SYNA), another Thomason favorite, is selling at a bargain price. The company, which makes touch pads for notebook computers, supplies big names such as Compaq, Dell, Apple, and Hewlett-Packard. For the fiscal year ending June 30, 2002, Synaptics logged a 36% revenue jump.
Despite a rough year for air carriers, Thomason likes Southwest Airlines (NYSE: LUV) for the long haul. The company has a reputation as a well-run outfit and regularly scores high marks for customer service. He’s impressed with management, and he thinks the company is poised for big gains once air travel bounces back.
Thomason concludes his list with a real estate investment trust (REIT), Public Storage Inc. (NYSE: PSA), which rents out space. “They’re the largest storage company in the country, and the business is recession-proof,” says Thomason. He also likes that Public Storage expanded its business to include truck rentals and moving services. “All are sound operations and will help support a dividend yield that currently stands at close to 6%,” he says.
Bill Thomason’s Private Screening Picks