Ryan Leggio: Can you give us a little bit of your opinion on a couple of financial companies that you own right now? One being the insurance company Chubb, which you owned in the previous fund and, maybe another, American Express, where there is a lot of controversy there of what the true intrinsic value is there.
Mani Govil: Chubb is a very good execution company. They consistently execute far better than the competitor's insurance company. If you look at some of the commonly looked at metrics, such as combined ratios and so on, they have been very disciplined in terms of pricing. They have been very disciplined in terms of execution. If you look at, for example, Consumer Reports and look at how they are viewed by their customers, they are viewed very favorably. And here's a company that is also valued very cheaply relative to both history as well as future prospects. So we think it is a wonderful investment for that reason.
American Express, a wonderful franchise, got a little overvalued and started having some problems in terms of delinquencies and so on. The franchise has good, long-term robustness. It is going to be there for a long period of time. However, because of the short-term credit-related problems, the stock price went down quite a bit. That was the time to get into the company. This is very typical. Typically good quality companies may have short-term issues and the market tends to focus much more on short term than long term. Those are some of the best investing opportunities for fundamental investors like us.
Leggio: As an example, American Express has seen a tremendous run-up since the March bottoms.
Leggio: How much of a margin of safety do you still think you have with American Express, and do you demand a larger margin of safety for some of your financial companies than you would, say, a Wal-Mart?
Govil: The margin of safety that we demand basically depends on the riskiness of the company. The greater the risk, the greater would be the margin of safety that you would demand. That is true. I am not sure that in American Express and Wal-Mart's case--even though Wal-Mart may be viewed as very safe, it is ultimately a retail business, and retailers, even if they are the biggest retailer-- have a track record of slumping or losing market share eventually. But yes, very true; given that American Express has come up, our upside, relative to current stock price, is far lower and hence the relative position size, relative to our other investments, has also declined.