Mid-Year Top Performers: Russ Kaplan

07/08/2016 10:00 am EST

Focus: COMMODITIES

At the start of the year, MoneyShow featured its annual Top Picks report asking the leading advisors for their favorite investment ideas for 2016. In the report 85 stocks and funds were recommended. This interview is part of our series highlighting the top performing advisors as of mid-year.

Steve Halpern:  Our special guest today is value investing expert, Russ Kaplan, editor of Heartland Advisor.  How are you doing today Russ?

Russ Kaplan:  Just fine thank you.

Steve Halpern:  Now, first off, congratulations are certainly in order.  In our 2016 Annual Top Picks report you chose Freeport-McMoRan (FCX) as your favorite stock for the year and since then it's up nearly 63%.  Could you share an overview of Freeport, what it does as a company, and explain your original rationale for this pick.

Russ Kaplan:  Okay.  It's a mining company.  It's heavily in copper and gold and the prices of those two commodities are way down but I don't see that happening in the future.  One of the big things with Freeport is they're getting their act together.  

They're paying down their debt by selling things, like a 13% interest in their Morenci Mine and TF Holdings. So they're getting their act together -- but this is not your widows and orphans stock.  

I see that copper prices -- which is the main thing -- are way down and I don't see it staying down, and when the price goes up I see Freeport going up even more.

Steve Halpern:  For those who aren't familiar with the company, where do they primarily operate and where are their mines located?

Russ Kaplan:  All over the world.  They're in Indonesia, North and South America, and Africa, so it's pretty much around the world.

Steve Halpern:  You've touched on this, but you could give our listeners a brief overview of the developments over the last six months that would account for the stock rising so sharply in price since you first picked it.

Russ Kaplan:  Like I said, the main thing is that they're paying off their debt and has happened so often in the stock market that we take advantage of, they greatly overreacted to the low copper prices so we just took advantage of it.  

Steve Halpern:  Looking ahead to the second half of the year, do you still remain optimistic on the mining sectors in general, as well as Freeport specifically?

Russ Kaplan:  Yes I am optimistic because I don't see the prices going any lower and based on cycles I look for the price to go up and therefore the profits of Freeport-McMoRan and all of the other commodity-type companies.

Steve Halpern:  You've mentioned that there's a speculative element here, but also as a value investor you take a very long-term view. So is it fair to say that this is the type of stock that someone should look at if they have a multi-year outlook?

Russ Kaplan:  Yeah, every stock I recommend is based on a multi-year outlook.  I'm not a trader and nobody knows what's going to happen in the short-run, even if they say they do, but it's a nice speculative stock.  

Steve Halpern:  Before we go, would you be kind enough to highlight perhaps another name or two that investors might consider looking out for the second half of the year?

Russ Kaplan:  Yes, two that I like very much are Apple (AAPL) and Disney (DIS).  Disney is greatly overreacting to some declines in ESPN.

And Apple is doing just fine, but the advisors on Wall Street don't like it but it's selling lots and lots of its products and it's got a fiercely loyal customer base, so those two would be my favorite right now.

Steve Halpern:  Again, our guest is value expert, Russ Kaplan of the Heartland Advisor.  Thank you so much for your time today.  

Russ Kaplan:  Okay, thank you, always a pleasure.  

By Russ Kaplan, Editor of Heartland Advisor

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