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David Smith CIO of Rockland Trust

Aug 13, 2012|

Transcript - Not for consumer use. Robot overlords only. Will not be accurate.

We're joined now by David Smith David is the chief investment officer at Rockland trust he joins us today on the financial exchange good morning David. The point are you good good so I think I read that press release has just hit a couple billion dollars in assets under management as Aaron. That's correct yeah we're very excited about that milestone for our firm you don't rock and trust has been. In the money management business -- the bank formed in 1907. And it took us 100 years to 2000 incentive that the crust group the first billion dollars in assets under administration. We were very. Thrilled to be able to announce he reached -- second billion dollars in just exactly five years ago we've been on a very good growth trajectory and -- very pleased with the trust declined to placed in us. Well congratulations let me ask -- are you a buyer or US seller on Hewlett-Packard -- I'm looking at their share prices today in about nineteen dollars a share and this is the company that's going through a pretty big transformation. Yes certainly -- and it's very much out of favor you know the company has had -- CEOs in forty years. -- you know it's been the first one was pushed out as a result the behavioral problem that the board this wouldn't tolerate the second to -- a complete disaster. And made some very difficult and police think was. Wrong TJ it is the company was pushed out that's just buddy here in the opinion there. And the currency EO we feel very good about that Whitman that -- yet today and we feel like she's doing. Think that need to get done to turn this company around that we recognize fully that that the investment communities are skeptical about the company. What they are they going to be of the hole but dividend AFC vivid dividend yield two point 8% what you think having it cut it keep it. Yeah I think no I don't think they need to cut and -- that you would be inclined to see that dividend will not focus I think. We clearly don't want them to do that until it made some of the changes that they need to make but they have the ability in his company terrorist plot to cash flow if they wanted to increase that in the clip we prefer to see them focus on. Turning around the operation to the company and if you see it get it increasing your slow BP BP happy at that. All right well I guess we we keep an -- with your target price on Hewlett packer he buying it now our you know wait until late today -- -- Today -- do we do and won't -- today we have a target of 34 dollars which seemed like a long way from here you know at least 5% increase in today's price. But you know the company is currently trading at five times earnings day which is incredibly well you know. On the market for example it's trading at around fifteen times right now so we don't as aggressive assumptions built into our valuation model we look at that the company trading at about eight times earnings which would still be deep discount pulled the broadest stock market into the technology sector and if we get to eight times earnings see you -- in -- is 34 against the 5% increase. We've seen some other people that we look at their research and other people have a price target is what you don't share. Do you think the are capable of hitting those earnings projections I guess that's the million dollar question -- Eat that's the million dollar question but the good news is because got an announcement yesterday when they took up guidance which is the first and -- that happened several quarters this company can't recall last time in a positive. Financial surprise from Hewlett-Packard so. We've we've really became in the fuel leak thinker the undercurrents that turnaround is -- really some evidence warming to show that they are executing reasonably well. And it and it just assembling the company right they -- this may make Whitman's just basically and a going in their cleaning house and get rid of some aspects of the company that were purchased by Mark -- Well I think that she's certainly looking at potential of doing so not only Mark -- -- his successor her predecessor. Babies and very expensive acquisitions and in the announced yesterday there was an eight billion dollar write down of goodwill. Which is a concession. In my mind that they get overpaid in history and -- just the right -- the valuation of those businesses on their balance sheet. But we think that -- really technical look at those acquisitions. One of the major ones like EDS the and be in the press services company which really outsourced technology services. And it was purchased incident heyday with the idea that -- be able to build an IBM business model. Including it hasn't worked goat Billy the -- it right on the trigger right away to create value -- is spinning it off a solid somebody at some point that is that there are synergies with that business in the residual packet at a picnic will be able to that a way to execute on that it's not it really is some value in unlocking some of these companies and you missed any amount of science silence. That's right all right -- David thank you very much for your time sure appreciate it great historically had a great weekend -- as David Smith he's the chief investment officer Rockland trust he'd like to. Hewlett-Packard is his favorite stock today it's trading at nineteen dollars and 36 cents a share with a two point 8%. Dividend yield so June I know you like to handicap the ponies but do you also -- to handicap the VP nomination. Not as much but you -- you you can download the free app you know is a VP app for Mitt Romney yeah. A lot of stuff going on the weekend -- we've got a possible announcement of the VP race. We've got the closing ceremonies at the Olympics we think he waits till Sunday night Monday. Yeah yeah maybe. It's late Saturday night but tell you what like eleven when we come back is that would Obama did it. -- yeah when we come back and tell you with the odds -- Tuesday to front runners are. Right because I checked out the entry odds this morning that -- did -- to give you all the odds in terms of who's gonna win. There is gonna be the VP nod for Mitt Romney that more coming up on an extra.