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Doug Kass Picks Winners On Rising Interest Rates
22 Mar 2012 EDT - CNBC.com
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Rising interest rates will mean a new batch of winners and losers, Seabreeze Partners President Doug Kass said Thursday.

First, Kass identified companies with large debt-to-equity ratios as the biggest losers.

Most vulnerable were telecom, media and materials, such as Pitney Bowes, CenturyLink, PPL and CMS Energy.

Next were “high yielders.”

Rising interest rates would mean returns from these companies would become less competitive.

Plus, there was another potential headwind.

“If you consider the proposals by the Obama administration to nearly triple the tax on dividends, it’s going to make the dividends less valuable,” Kass said on “Fast Money.”

Frontier Communications, Windstream and Gannett were in this category.

Third, Kass identified losing sectors and companies as those that had benefited from low interest rates but were now facing shrinking margins, such as homebuilders.

Kass said research on any particular company was necessary but had general advice.

“It’s best to take advantage of the strength of last 2½ years and sell them,” he said.

But who’ll benefit from rising rates?

“The most obvious winners are banks,” Kass said, adding that he would stay away and sell them on their strength.

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