Inside Wall Street
`GUNSLINGER'" WEINSTEIN: STILL QUICK ON THE PICKS
Willie Weinstein, one of Wall Street's "gunslinger" traders in the 1960s and early 1970s, is back doing what he did best: Committing big bucks to huge chunks of stocks. He and his fellow traders at major brokerage firms were called gunslingers because of the gutsy way they snapped up shares. Weinstein now heads his own investment firm, Genesis Merchant Group in San Francisco, and his recent stock picks show his hot hand is still, well, hot. Charter Medical, Qualcomm, and Ocom were among his picks that have tripled in the past two years.
"Our only game," says Weinstein, is to "make money for clients by picking the right stocks, period." He limits Genesis' $1.4 billion portfolio to 30 stocks--primarily companies in the process of "significant change" that Wall Street has yet to appreciate. Aided by three analysts and a few partners, four-year-old Genesis has attracted big investors, including the Pritzkers of Chicago and entrepreneur Sam Zell.
Here's what Weinstein, who was chief trader at Oppenheimer for 13 years, is now betting on:
-- Charter Medical, whose shares he believes are still "misvalued" because of its unrecognized "excellent" psychiatric-hospital operations. The stock is "very attractive," adds Ted James, a Genesis partner and veteran medical industry analyst, given its strong cash flow and continued deleveraging. He sees earnings rising to $3.60 a share in fiscal 1994, up from an estimated $3 in 1993.
-- Community Psychiatric Centers' recent turnaround gives it a good chance of sharply accelerating earnings growth, says Weinstein, who notes that the company's balance sheet is a "fortress." Its equity comes to $450 million, and total debt is only $26 million.
Weinstein sees profits jumping to $1.25 in fiscal 1994 from an estimated 50 this year.
-- Itel is positioned to benefit from the "explosive growth" in demand for copper, coaxial, and fiber-optic cable--used in cable TV and local-area networks-- via its Anixter Distribution and Antec divisions. Expected to be in the red this year, Itel should earn $1 in 1994 and $2 in 1995, says Weinstein.
-- Equity Residential Properties Trust, the nation's largest REIT for apartment buildings, went public on Aug. 18 at 25 a share and swiftly jumped to 36. The stock is enticing, says Weinstein, because of the company's rapid growth, plus an annual dividend of $1.81 a share.
-- Recognition International markets data-retrieval and imaging products to companies that process huge amounts of paper-based information. Weinstein says that the company will be a big factor in the streamlining of "work flow," an area he expects will become a big market. He sees earnings rising to 84 in 1994 from 1993's estimated 32 . TOPS WITH WEINSTEIN
Stock Recent price P/E* Two-year
MEDICAL $22 6 $35
COMM. PSYCHIATRIC 13 10 27
RESIDENTIAL 35 22 52
ITEL 28 17 40
INTL. 17 20 33
*Based on 1994 earnings estimates
DATA: BRIDGE INFORMATION SYSTEMS INC., GENESIS MERCHANT GROUP
GENE G. MARCIAL