NEW YORK (MONEY Magazine) -
He dropped out of the fund biz six years ago, but Michael Price has not retired from investing. His family investment fund, MFP Investors, currently manages more than $700 million. Here's his take on the market and a few stocks he's been watching
THE MARKET For Price, some bad news would be good news. "Stocks are fully priced," he says. "What am I looking for? A scandal. An earnings disappointment. You've got to wait for the bad news to get a bargain." The scarcity of cheap stocks has Price 20 percent in cash.
DILLARD'S Dillard's is a struggling department store chain that Price thinks is ripe for a takeover.
"The company is family controlled -- they're bad managers and they don't know what they're doing," he says bluntly. "But it's not going to stay this way forever." Now at $17, Dillard's is worth almost twice as much, Price says.
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MERCK Price thinks the market has overreacted to a dry spell in Merck's new-drug pipeline.
"You know they're going to come up with drugs," he says. At $48, Merck is trading at a mere 17 times earnings.
"These are levels we haven't seen since Hillary got elected to the White House," he quips.
HELMERICH & PAYNE Price doesn't like big oil companies because he doesn't trust their ability to estimate the size of reserves. Helmerich is an oil driller, not a producer.
Price likes the company for its huge real estate portfolio, which he believes is not sufficiently reflected in the $29 stock price.
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J.P. MORGAN CHASE/BANK ONE Price may still be best known for the role he played in strong-arming Chase Manhattan Bank into selling itself to Chemical Bank in 1995. His funds made $500 million on the merger, so we couldn't help but ask what Price thought of his progeny's latest deal -- that is, J.P. Morgan Chase's acquisition of Bank One.
"It's a strategic deal that probably makes sense," he says. "But I've been out of Chase for a long time."
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