Back to Basics for Investors: Blackrock's Kapito
It’s back to basics—companies that offer strong dividends and good products—for investing, Robert Kapito, president of Blackrock , told CNBC Friday.
“You have to get into the company,” he said during a discussion about the upcoming IPOs for HCA and GM, “and look at the products. You have to understand what management is doing and believe what management is doing.”
Kapito said he’s a “non-deal junkie,” meaning he’s less concerned with who is underwriting an IPOdeal, than what the company being offered provides to the investor. Among those investors who depend on Blackrock, said Kapito, are firefighters, police officers and teachers.
“It comes down to price,” said Kapito. “Our clients want performance: It’s not a story [they want].”
Kapito said one company that performs is DuPont , which is paying a 4.4 percent dividend, higher than Treasurys, now at 3.25 percent.
“This is a company that has paid a dividend for 480 consecutive quarters,” he added. “The companyis in a good space: They are in areas that feed the world, and we all know that there isn’t enough food in the world.”
Kapito also said, when dealing with LBOs, he wants to sit at the table with the private equity company involved. He added that he would like to see buyers get the covenants, instead of banks getting them all, as they do now.