It looks like another Investment Guru is transitioning his way out: David Dreman of Dreman Value Management now has bestowed the title of CIO to Cliff Hoover. Dreman himself remains Chairman of the firm.
Cliff Hoover has been interviewed by Morningstar lately on the transition as well as the difference in the investment styles between him and Dreman.
In particular and as an example, Cliff discussed the firm’s view on BP, the troubled oil companied caused the oil spill in the Gulf of Mexico:
Carlson: One last thing we talked about, how you're continuing to maintain that contrarian approach. I know we talked about one recent purchase that sort of exemplified that penchant for going for companies that have been hit hard by "headline risk" as some would call it?
Hoover: Yes, it was – you as might expect a contrarian, a Dreman contrarian portfolio manager would be looking at BP in June after all the hysteria and the market overreaction, but we think fundamentals trump hypotheticals. We had a lot of hypotheticals in that Gulf spill, but when we looked at it, we realized that the market was assuming about a $115 billion future liability. After all of our work, analysis, and examining other spills through history, our number, our calculated number is about $30 billion for that future liability, which shows you the great margin of safety underneath that stock. We think it was a buy, and we think the stock's going to go back to the $70-plus level. We think BP is going to reinstate dividend early next year, and again just a great Dreman low P/E overreacted-to type purchase, which you've seen from us over the years, just a very typical Dreman-type stock.
Click here for the full transcript
Click here to check out David Dreman’s complete stock portfolio.
Click here to read Jacob Wolinsky’s reflection on Dreman’s retirement.