Managers splurge on bargain stocks

Fund managers have been on a shopping spree, snapping up bargains flowing from Monday's stock market meltdown.

"I just loaded up the boat," quipped hedge fund manager Derek Webb of Webb Asset Management. "When you have a panic-selloff ... you just want to get capital into the market."

During the Monday downturn, he bought Canadian names like Agrium, Potash, Aecon Group, Harvest Energy, Fording Canadian Coal, Daylight Resources, and BCE. He also added exchanged-traded funds (ETFs) tracking broad market indexes if he couldn't get enough stock.

That strategy enabled him to be fully invested and buy time to get together his shopping list of non-economically sensitive stocks. He bought them after selling some of his ETFs into yesterday's market rebound.

On Monday, the S&P 500 plunged nearly 8.8 per cent, while Canada's S&P/TSX tumbled 6.9 per cent after U.S. lawmakers failed to pass a $700-billion (U.S.) bailout package to rescue the financial industry. Yesterday, the S&P 500 bounced back 5 per cent, while the S&P/TSX composite gained 4 per cent.

Yesterday, Mr. Webb, an earnings momentum manager, bought one Canadian stock - ATS Automation Tooling Systems - and loaded up on U.S. names like natural gas pipeline transporter ONEOK Partners; health care products provider Natus Medical and expense reporting software maker Concur Technologies.

"I'd rather take names that are not exposed to the economy if we are headed for a global recession, depression or whatever," said the San Francisco-based manager of the WAM Canadian Performance Fund.

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