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COMMENT
Markets. He's been quite active. He's against momentum plays and meme stocks. He skewed more towards value and that's paid off. But over the last 2 months, we've seen a reversal of that. With the turmoil between Ukraine and Russia, sentiment has been swinging decidedly negative. Sentiment hasn't been this negative since Brexit, in the summer of 2016. So he's become more aggressive, selling those companies that have served them so well on the value side and buying more risk-on positions. He's anticipating this strategy will pay off quite well.
COMMENT
Advice for risks on the radar? Take a deep breath. There's lots of hyperbole, sky-is-falling talk. Whether it's geopolitical such as the situation in Russia, which is serious, or something else, these tend to resolve though not after serious damage. Russia's economy is actually smaller than the Canadian economy; it's about the size of Australia. But from an energy standpoint, it certainly has an impact. Higher interest rates and inflation numbers are a little scary. Remember, the dislocations we've seen are severe and will start to rectify. Demand and supply will come together and put a damper on inflation, as will the Fed raising rates. Buying good companies will serve investors well. You can see his firm's article on supply chains at goodreid.com.
SELL
Great dividend, low valuation at 10x, and growing well, but he grabbed an exit point, as 43% of revenue comes from a drug going off patent next year. Pricing pressures mean that ABBV will see a decline in revenues and cashflows. Did well, but time to leave in favour of companies well off their highs.
0
HOLD
Block trading issue, institutional investing profit margins? With large companies, investigations are fairly common, but you have to look at the long-term material effect of these issues. Any financial penalty is not likely to be material, so he's not upset. More aggressive on wealth management, which generates more than 50% of revenue, with higher margins than the institutional side. Think of the briskness of trading. Well managed. Good promise. Low multiple at 11x, and could duck below 10x on earnings next year.
investment companies
funds
BUY
Hurt. Against its fundamentals, trading at a shockingly low level of 5x earnings. He expects $7.50 EPS this year. Growth is impressive, getting into EVs. Objective is to double revenues by the end of this decade. Earnings doing well, costs under control. Good runway. Cruise is a leader. Tremendous promise.
Automotive
DON'T BUY
Represents change from risk-on to risk-off in markets. Peaked at over $300, now below $100. No fundamental floor, so nothing to support it besides a concept, albeit a good one. Extremely expensive at 7x revenue, doesn't make any money. Don't be lured by stocks that fall precipitously, as there may be no end in sight.
Technology
COMMENT
Stock's way down, should I buy? Don't be lured by stocks that fall precipitously, as there may be no end in sight. He remembers Nortel. The stock ran up to well over $100, but the price had no relationship to its fundamentals. It fell back, a lot, and he was asked should I buy it now, or how about now? How about at 50%? The percentage only makes sense if the original price has some grounding in value, which this stock didn't. Be very careful about buying something simply because it's a percentage of what it used to be.
PARTIAL SELL
Phenomenal job of growing its franchise. But since the stock split, its multiple has gone up, outpacing its growth and revenue rates. Multiple is close to 30x. He trimmed by about 1/3-1/2 a few weeks ago around $163. As prices rise, value tends to drop. He always likes to maintain a balanced portfolio in terms of risk, and he encourages this strategy.
electrical
electronic
HOLD
GOOG vs. AMZN Both are splitting stocks. Though this has no economic effect on the company, it does have a psychological effect. Becomes more attractive to those with limited budgets. Creates the opportunity to perhaps be included in the Dow, a price-weighted index. Very good companies. GOOG trades inexpensively compared to growth rate. AMZN is growing into its multiple and doing good things, but not as mature as GOOG.
Technology
HOLD
AMZN vs. GOOG Both are splitting stocks. Though this has no economic effect on the company, it does have a psychological effect. Becomes more attractive to those with limited budgets. Creates the opportunity to perhaps be included in the Dow, a price-weighted index. Very good companies. GOOG trades inexpensively compared to growth rate. AMZN is growing into its multiple and doing good things, but not as mature as GOOG.
specialty stores
PAST TOP PICK
(A Top Pick Mar 19/21, Up 8%) Still likes the banks, though a rough go the last little while based on Fed speculation. Much lower expectation of a 50 bps hike, more like 25 bps. Higher interest rates are good for banks, and BAC is most sensitive to this. Worry that aggressive hikes will snuff out the economy and force a recession. He doesn't think this will happen. Good time to buy.
banks
