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Ralph Whitworth, the head of Relational Investors, was interviewed on Bloomberg last night. Stocks Whitworth likes are Sprint Nextel Corporation (NYSE: S) and National Semiconductor Corporation (NYSE: NSM).It appears Relational still owns Home Depot Inc (NYSE: HD) where a Relational partner has joined the board. Relational helped force the ousting of former Home Depot CEO Bob Nardelli in January.
What is Whitworth's formula? While he did not explicitly say, it appears he likes companies that generate a lot of cash with underleveraged balance sheets. The combination of which can be used to return cash to shareholders via dividends and share repurchases.
One stock Whitworth said he did not like is Motorola Inc (NYSE: MOT), saying the business is too competitive, citing RAZR phones which sold at one point for $300 now sell for as little as $30.
Whitworth also does not like the auto industry saying it is going the way of the U.S. television manufacturing industry.
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