Kinnel: 3 Closing Thoughts From the Conference

Russ Kinnel: Hi, I'm Russ Kinnel, director of manager research with Morningstar, here to share three quick thoughts about the conference as we're just about ready to wrap up.

My first one, David Giroux of T. Rowe Price Capital Appreciation shared a very nice summary of the markets the last 10 years, in which growth has been great, value has been left out in the cold, and as he explained it, you have a large chunk of the S&P 500 just facing tremendous secular challenges. There's a very good reason why growth is killing value, because reversion of the mean is not working for a lot of value industries. That's a classic value technique: You buy a retailer or another cyclical stock that's down on its luck and figure things will turn around. Historically, that's how it worked. But, of course, if Amazon or Google is eating your lunch, that's not how it's working today, and that money just might not be coming back. I thought it was a really nice summary.

Now Jean Hynes of Wellington, who's a healthcare investor, she pointed out that healthcare has really been largely immune from those challenges, partly because Amazon would face tremendous regulatory challenges in going after a lot of healthcare. But pharma, doctor's visits, surgeries, of course, those are very different from something that a Google or an Amazon can take over.

Then finally, a bit of a surprise for me, we've been hearing nice things about GE. I haven't heard people say nice things about General Electric for a long time. The stock's been killed. But yesterday, we heard David Green of Hotchkis & Wiley talking about, yes, it's got high debt levels, but they've got tremendous assets that they can sell off and lower those debt levels. And they've been doing that already.

Then today, we heard David Giroux, with GE getting really cheap, he actually spent two whole weeks just on GE and came to really like it. He said it's had two decades of horrible management that have really squandered assets, but they really have some strong businesses. Now they've got good management and they really just need to turn around a couple of businesses for things to really click for GE. David Giroux says GE is in his portfolio now. He says it's maybe got one of the greater downsides, but also maybe one of the greater upsides of any of his picks. Really interesting to hear people that like GE for a change.

From Morningstar, I'm Russ Kinnel.