Stopping By An Edgemoor Investment Seminar

I attended a two-hour pitch last night held by a local Washington investment advisory firm known as Edgemoor Investment Advisors, located on M Street in downtown D.C. and managed by Timothy C. Coughlin.

Coughlin is a banking maven on the Washington scene who was most recently president of Riggs National Corporation before joining Edgemoor in 2004.

Coughlin is also a member of the Federal City Council, the Economic Club of Washington and WETA.

Edgemoor was offering its investment record to potential customers. They have a pretty good one: 10.3 annual return over the last 15.75 years compared to 6.2 for the Lipper Balanced Funds and 7.9 percent for S&P/Lehman Blended Index.

If you invested $1 million with Edgemoor Balanced Portfolios back in 1993, you would have $4.683 million now, according to a company prospectus.

So what are they doing these days? The markets are taking a hammering, but these guys are clearly buy and hold.

Two stocks the firm has bought are Pfizer, the pharma giant, and Terex, which makes construction equipment. It considers both companies to be undervalued.

"We like Pfizer because it has a 7.6 percent [dividend] yield, and [the stock] is selling at 6.7 times earnings,"" said Edgemoor President Tom Meehan. He noted that the Pfizer yield is twice what 10-year U.S. Treasury bonds are currently yielding. "We haven't seen PEs like this for high-quality companies since the early 1980s," said Meehan.

"The market is almost giving Terex away, because it's selling at 80 percent off its 12-month high," Meehan said.

Edgemoor's biggest holding is Berkshire Hathaway(though no more than 5 percent of assets), the Warren Buffett-run conglomerate that also owns a big stake in the Washington Post.

Coughlin and his colleagues also are buying Wrigley bonds, the gum giant that was recently acquired by McLean-based Mars Inc., which is privately held.

They like the Wrigley bonds because the yield is 8.5 percent. and it matures in less than two years. Meehan said the firm is wary of any long-term bonds because of the threat of inflation and interest rates moving higher, which can take away from the total return.

Those looking to let Edgemoor invest their money need to have a minimum of $500,000 in assets available to invest. Their annual fees are 1 percent of your holdings in their funds.

Tom Meehan talked for 10 minutes about the market and pointed out that stocks still return more money than bonds over the long haul.

Tom recommended several books at the conference, which was held at Columbia Country Club in Chevy Chase.

The books included the current biography of Buffett, called "Snowball" and Jeremy Siegel's "The Future for Investors."

By Tom Heath  |  November 13, 2008; 1:24 PM ET  | Category:  Value Added
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