6/1/2003, The Wall Street Transcript: Excerpt from Interview with Sarat Sethi

Subscribe at TWST.COM for the entire article.

TWST: Could you give us a brief overview of Douglas C. Lane & Associates, and what your responsibilities are there?

Mr. Sethi: Douglas C. Lane & Associates is a registered investment advisory firm located in Manhattan, New York. We manage common stock and bond portfolios primarily for high net worth individuals and families, but also for some pension plans, foundations and endowments. We manage approximately $1 billion of assets. Our only business is investment management. We are not involved in any other business activity, do not sell any financial “products” (insurance annuities, etc.) and thus avoid any conflicts of interest. Our clients are located throughout the United States and in a few foreign countries. I am one of four owners of the firm, and my responsibilities include portfolio management, economic analysis and company research. In fact, every portfolio manager in our firm conducts research along with our research analysts. We feel that it is important for every portfolio manager to engage in research to ensure that they understand the fundamentals of the companies owned by our clients.

TWST: What is the overall investment style of your portfolio investing?

Mr. Sethi: We think of ourselves as core investors. We do not fit into a style box such as growth or value, nor do we find those labels very helpful or particularly accurate in describing investment approaches. We are also long-term investors and do not try to time the market. We assess long-term economic and industrial trends and make investments that leverage or avoid these trends while trying not to subject our clients to undue risk. The basic tenet of our firm is that successful investment results are derived from the growth of the corporations whose common stocks are owned, not from attempts on our part to manipulate capital in the stock market to take advantage of near-term emotional or momentum trends. We diversify our clients’ portfolios by having them own 50-60 companies in many different industries and sectors. We invest directly in common stocks and bonds and do not invest in any types of options, derivatives, mutual funds, or structured financial products. While dividend income return has been and in the future will be even more of an important consideration, we have and will invest in companies that offer little or no current income because they are expanding rapidly and need their cash to finance growth. In this respect, we are very mindful of the new tax law and its implications.

TWST: Last year, you liked p&c insurance.

Mr. Sethi: Yes and we continue to invest in this area as we see increased demand and firmer pricing for many insurance products. One of our favorite stocks in this area is AIG (NYSE:AIG). With a AAA balance sheet and a very strong management team, we are confident in AIG’s ability to grow its earnings over the next few years.

TWST: Is there anything you’d like to add at this time, by way of summary?

Mr. Sethi: The last couple of years have been difficult for many investors. However, wealth is created over many years. We feel that investing for the future while avoiding unnecessary risks is the best way to create wealth. By working closely with our clients and giving them the best possible investment service and results, we create real value for them.