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Davis on Clipper's 'Camel' Picks

Clipper fund manager Christopher Davis says the recent downturn offered a rare opportunity to buy high-quality firms that can weather the harshest environments.

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Dan Culloton: Let's talk about some of the other names that have shown up on the portfolio. At least I noticed in Clipper (CFIMX), which I interpret to be some of your highest conviction ideas, that Diageo (DEO) showed up in there in recent months. I wonder what attracts your firm to that stock.

Christopher Davis: I think maybe what I can do is talk about a category of stocks that is in Clipper, and we sometimes call them "camels." You think about a camel as something you can rid through the desert. It doesn't need water, it can go a long way. In the chaos that we've been in, it's true that there are probably some cyclical firms, including some in financials, that could get very cheap. If you buy them right, you get them near the bottom. We also say the ones that do best in the recovery are the ones that just barely kept their lips above water.

Dan Culloton has a position in the following securities mentioned above: SLADX, CFIMX. Find out about Morningstar’s editorial policies.