It's a Gas

{Q} What companies do you own in this sector?

Our favorite natural-gas stock is called Chesapeake Energy [NYSE: CHK], a company that has sold 70 percent of their natural gas production for the year at more than $9 per million cubic feet. So with natural gas [now] at $6.70, they’ve sold their production at a very high level through the end of the year. The stock doesn’t reflect that they’ve sold their production; it reflects the natural-gas market, which has all this inventory.

{Q} What other investment trends are you currently excited about?

The exchange-traded funds. These are funds that buy all the securities in a particular index, but can be traded like a stock. We have found that this is an efficient, inexpensive way to give our clients a diversified exposure to foreign markets. Investing directly in foreign markets can be very difficult—information can be difficult to get and accounting systems differ from country to country—so it becomes an immense research effort. But an exchange-traded fund, because it is run by a computer that buys the whole market, is a very efficient way to get that exposure. So the analytical work is finding out which regions and which countries you want to be in, not the individual security analysis.

{Q} Why give your clients foreign exposure?

If you look at India, China, South Korea, all those economies are growing about twice as fast as [that of] the U.S. So if you’re looking at stock price appreciation, which is generally affected by the growth rate of the economy, you want to be exposed to markets where there’s that kind of economic growth.

{Q} What do you like locally?

Locally, UnitedHealth Group [NYSE: UNH] is our largest health-care position in our blended growth portfolio. We think [CEO] Bill McGuire has done a fabulous job. They have been growing consistently at 20 percent, 25 percent. Their P/E valuation is under that, so it’s growth at a reasonable price. Unlike most HMOs, they don’t have as much insurance risk, yet they’re the largest plan manager for corporate America, where the companies themselves take the risk through self-insurance. Now, during the recovery, with 200,000 more jobs being added per month, you get more people on corporate payrolls being covered, and they’ve been very successful in adding both corporate and insurance health plans. They’ve also been very successful in adding new enrollees through the new senior Medicare drug plan.