In less than a month, the longest bull market is history vanished as benchmark indices such as the S&P 500 fell more than 30 per cent from their peaks. The downturn stunned investors, the professionals included, with many selling quickly to accumulate cash. Although they stayed on the sidelines at first, portfolio managers have now begun to deploy some of the cash. Here’s what they’re buying:
Keith Richards, president and portfolio manager of ValueTrend Wealth Management — Alphabet Inc.
Keith Richards makes his investment decisions based on the technical analysis of stocks. When Alphabet Inc. Class A stock lost more than 30 per cent of its value between February and March and approached the US$1000 per share mark, but didn’t fall below it, Richards spotted a “massive” level of support and bought in. Charts aside, he believes that this recession will spell the end of several smaller companies and continue to shift the focus of investors toward the large-cap tech companies that will continue to lead the economy for years to come.
Cameron Scrivens, vice-president and portfolio manager at JCIC Asset Management — Visa Inc.
Cameron Scrivens sees Visa Inc.’s potential as a defensive name over the upcoming months, even if it did lose 37 per cent of its value since February. Scrivens’ thesis is based in the real-world: If consumers are staying home, there’s likely to be a surge in online spending. Many of the stores that have remained open during lockdowns have stopped accepting cash. Visa would stand to benefit from both. If the stock does fall again, Scrivens will be looking to add more.
Norman Levine, managing director at Portfolio Management Corporation — The Walt Disney Company
Norman Levine opened a half position on Disney for his clients last week as a play on the recovery of the tourism industry. When consumers receive clearance to travel and are comfortable doing so, Levine sees the company’s Disneyland and Disney World theme parks, along with its cruise ships, as being a top destination. The damage to the tourism industry has been extensive, but while cruise lines and hotels might take a while to regain their strength, Disney is better capitalized and has the potential to rebound quickly. It helps that while some of its core businesses are down that the company has a streaming service in Disney Plus to fall back on, Levine added. Disney is down 34 per cent from its 52-week high of US$153.
Greg Taylor, chief investment officer at Purpose Investments Inc. — Brookfield Asset Management Inc.
Brookfield Asset Management Inc. has cooled off significantly after an almost 50 per cent slide since February and Greg Taylor has taken advantage to add to a pre-existing position. At a time when interest rates are plunging, investors appeared to question the health of Brookfield’s real estate assets and whether it would be able to navigate debt markets. But the company’s leadership had been nervous about global markets for months and its acquisition of Oaktree Capital Management, which Taylor described as a “distressed credit shop” set them up to handle the downturn.
Jeff Parent, chief investment officer at Castlemoore Inc. — Horizons Betapro S&P 500 2x Daily Bull ETF
The speed at which the market is changing is unprecedented as far as Jeff Parent is concerned and the Horizons Betapro S&P 500 2x Daily Bull ETF allows him to take advantage. The ETF offers investors double the returns or double the losses of the S&P 500 on a daily basis. It’s the largest holding in Parent’s ETF at seven per cent. The markets are moving rapidly and Parent has been using the ETF to get quick exposure. If he had spent time looking for individual stocks, he said, he could’ve missed a massive swing. “I don’t have time to do the analysis,” said Parent. “This is a quick no-brainer decision.”
Jason Del Vicario, portfolio manager of HollisWealth’s Hillside Wealth Management — RIghtmove PLC
Rightmove PLC, a U.K.-based company that runs the country’s largest real estate listings website checked off all of Jason Del Vicario’s boxes: it has little to no debt, a margin greater than 10 per cent and it has posted a positive free-cash-flow yield in each of the last ten years. After shares dipped 43 per cent from their 52-week high of 710 pounds, Del Vicario got the opportunity to add the company to his clients’ portfolios. The investment decision is solely based on the numbers, Del Vicario said. “I don’t know where the U.K. property market is going, I have no idea and I don’t really care,” he said. “All I know is people are going to be buying or selling or renting apartments and houses … they’re going to be using Rightmove.”