Pat Naccarato

(A Top Pick Nov 30/07. Down 43%.) Investment management firm. Value style equity managers got hit but should rebound. They are #3 fixed income managers globally and had short-term performance issues. Valuation is so compelling that you will ultimately do well.

3rd largest global advertising agency. New management are in the process of restoring margins and profitability. Stock was impacted by the economic turndown. Fundamentals are turning upward. Good price.

Gets paid whenever anyone wants to move a phone number from one carrier to another. It is a monopoly and has a contract until 2015. Expanding globally. Has not been affected by the economy. Enormous free cash flow and no debt. Other business is SMS on cell phones. Transitioning into instant messaging, which has been slow to take off.

(A Top Pick Nov 30/07. No change.) Hair cutting franchise with 13,500 locations from Wal-Mart to higher salons. Also have Trade Secrets products. Recession resistant. Have never had negative same-store sales in 80 years.

(A Top Pick Nov 30/07. Up 11%.) Acquired by Macrovision (MVSN-Q).

Copy protection. Not a bad business, especially if the phenomena of Blu-ray technology starts to gain. Studios are paying for this service.

Diversified medical supply and pharmaceutical. Hitting new highs but valuation is still among the cheapest at 15X earnings. Double-digit growth through many years. 2.6% yield. Has a little bit of upside left. Long-term hold.

He currently has no energy exposure in his fund, but natural gas is an area he is starting to look into. Breakeven amount for making money in production is over the present price of natural gas. Producers will have to cut supplies, which will ultimately restore the balance. Could take a little while.

MasterCard (MA-N) and Visa (V-N) are phenomenal franchises and basically a global duopoly. Not tied to spending but transaction growth. PE multiple for both companies is somewhere in the mid-20s, which is very rich. On a 5-year time horizon, they will grow into that multiple. Would consider buying at a sub-20 PE.

MasterCard (MA-N) and Visa (V-N) are phenomenal franchises and basically a global duopoly. Not tied to spending but transaction growth. PE multiple for both companies is somewhere in the mid-20s, which is very rich. On a 5-year time horizon, they will grow into that multiple. Would consider buying at a sub-20 PE.

Not a fan of this. A commodity product. Ups and downs are very violent. Too much competition. Would rather own Intel (INTC-Q), which is the dominant franchise.

Not a fan of this. A commodity product. Ups and downs are very violent. Too much competition. Would rather own Intel (INTC-Q), which is the dominant franchise.

A dominant franchise with a very reasonable PE. Fantastic entry point.

We are currently under-building and homebuilders are very attractive. They are now generally trading below book value. This wouldn't be his first choice because of the leverage they have.

The dominant high-end builder. Fantastic franchise.