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Two Favorite Stocks from Lyrical Asset Management

Members of the Queenwood Team (kneeling l-r) Soren Kjeldsen of Denmark, Paul McGinley of Ireland, (standing l-r) Thomas Bjorn of Ireland, Tom Lewis of England, David Howell of England, and Adam Scott of Australia during the first day of the 2012 Tavistock Cup at Lake Nona Country Club.
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Members of the Queenwood Team (kneeling l-r) Soren Kjeldsen of Denmark, Paul McGinley of Ireland, (standing l-r) Thomas Bjorn of Ireland, Tom Lewis of England, David Howell of England, and Adam Scott of Australia during the first day of the 2012 Tavistock Cup at Lake Nona Country Club.

If you had invested with Lyrical Asset Management in 2009, you would have doubled your money by now.

And Lyrical CIO Andrew Wellington reveals the secret to his fund’s success -- he has only has 35 names in his portfolio.

“We scan through the top 1000 stocks that are in the market– and look for those stocks that the market is giving away for a great price.”

Wellington tells us his firm ‘does a lot of research and holds onto them.’ He goes on to say, when the thesis is proven right, he sells, moves on, and then finds something else to own.

Of course that begs the question - what is Lyrical holding right now?

Along with Jeff Keswin, managing partner of Lyrical, Wellington tells us the following are two of the fund's favorite names:

Aflac

These money pros like Aflac because of the company’s ability to perform. “Aflac is probably the most profitable insurance company in US,” says Wellington. “ROE is consistently around 20% - that’s significantly higher than most any other insurance company out there.”


Also he thinks the stock is cheap. “Historically the P/E ratio was near 20. I’m not saying that’s the right P/E ratio but currently its in the single digits.”

In addition, he adds, “they earn almost $4.5 billion every year in pre-tax profits. That gives them a nice cushion to absorb any future losses and makes it very remote they would have to raise dilutive equity.”

Dell

Wellington calls Dell ‘greatly misunderstood.’ “We like Dell a lot,” he says.

He thinks Dell continues to thrive, even if the table market starts to gain a foothold. “We don’t underestimate the impact of the tablet,” he says, “but the substitution effect (tablet for PC) will be greater in the consumer market than in the enterprise market.”

And Wellington says Dell makes most of its money in the enterprise world.

“Also when you have to create content, you really need a PC. A tablet is a great substitute for what you do in your home computer like listen to music, watch video or surf the web. But when it comes to using proprietary corporate software systems, you can’t fully substitute for the PC.”



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Trader disclosure: On Mar 19, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova is long VRTS; Terranova is long NXPI; Terranova is long IBM; Terranova is long MCD; Terranova is long CNX; Terranova is long EMC; Terranova is long MSFT; Terranova is long JOY; Terranova is long OXY; Terranova is long LQD; Terranova is long POT; Terranova is long TBT; Terranova is short April Gold futures; Terranova is short May Silver Futures; Weiss is long QCOM; Weiss is long BRCM; Weiss is long SNDK; Weiss is long HPQ; Weiss is long TBF; Weiss is long TBT; Weiss is long HAIN; Weiss is short JCP; Weiss is short AAPL puts

For Brian Kelly
Shelter Harbor Capital is long EXP
Shelter Harbor Capital is long ITB
Shelter Harbor Capital is long USG
Shelter Harbor Capital is long IYR
Shelter Harbor Capital is long KRE
Shelter Harbor Capital is long MHK
Shelter Harbor Capital is long SMH
Shelter Harbor Capital is short EWA
Shelter Harbor Capital is short EWY
Shelter Harbor Capital is short EWH

For Andrew Wellington
Lyrical Asset Management is long AFL
Lyrical Asset Management is long CAR
Lyrical Asset Management is long DELL

For Christopher Anand
No disclosures

For Stephen Bodurtha
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For Toni Sacconaghi
Mit Shah of Bernstein Research maintains a long position in Apple Inc. (AAPL).
Bernstein currently makes a market in the following companies AAPL / Apple Inc.




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