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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Showing posts with label Mutual Fund. Show all posts
Showing posts with label Mutual Fund. Show all posts
Wednesday, October 1, 2008
Sunday, September 14, 2008
Wintergreen Fund Semi-annual Report
The last six months have been filled with volatile worldwide financial markets that have kept all investors on their toes. The apparent freefall of some securities is providing huge buying opportunities for value investors, but at the same time the daily market fluctuations are somewhat bewildering to investors as we navigate turbulent market conditions. Wintergreen Fund has been affected by this volatile market: the Fund’s performance for the first six months of 2008 was (11.86%) only slightly better than the Standard & Poor’s 500 Composite Index at (11.91%). The market has not discriminated between high-quality and low-quality companies; virtually every stock has declined. Generally, markets reward solid, stable companies, but this year even the best companies have suffered. The movement from easy credit to little or no available credit has restricted normal business operations and slowed down speculation. We believe companies with the following three characteristics are great long-term destinations for investor capital, even though the short-term quotations are less than favorable: solid businesses that generate cash; businesses with pricing power; and businesses with rational management who create value for their shareholders.
A favorite story of mine as a child was “The Little Engine That Could” by Watty Piper. In this story, a long train needed help to get over a large mountain. Various railroad engines that had the capacity to move the train refused to help. They said the job was too big and difficult for them, and the mountain was too steep. The engines that were designed to haul heavy freight would not attempt to move the huge train. Eventually a small engine that didn’t appear to have the necessary get-up-and-go was asked for assistance and that small engine agreed to try to help the large train. Using all of its power and repeating ‘I think I can, I think I can’, the small engine got the freight train up to the top of the mountain. As the train went down the tracks on the far side of the mountain to deliver toys and treats to the children who had been waiting, the little engine repeated the phrase, ‘I thought I could, I thought I could’.
In this global market that looks too big for anyone or anything to bring it back to a more stable environment, I think that solid analysis of companies and careful accumulation of underpriced stocks has the potential to yield great rewards. Like the little engine that put its head down and worked at its assignment, the pursuit of fundamental research coupled with an appreciation of the consistency of human behavior should identify the securities that I believe will survive and thrive in the future. Now is the time when some of these companies are on sale. Although no one knows precisely when, it is inevitable that these wild bargain prices will at some point in time come to a close. When that happens, and with the benefit of 20-20 hindsight, many investors will wish they had accumulated a bigger stake in these bargain companies.
Read the full report (pdf)
A favorite story of mine as a child was “The Little Engine That Could” by Watty Piper. In this story, a long train needed help to get over a large mountain. Various railroad engines that had the capacity to move the train refused to help. They said the job was too big and difficult for them, and the mountain was too steep. The engines that were designed to haul heavy freight would not attempt to move the huge train. Eventually a small engine that didn’t appear to have the necessary get-up-and-go was asked for assistance and that small engine agreed to try to help the large train. Using all of its power and repeating ‘I think I can, I think I can’, the small engine got the freight train up to the top of the mountain. As the train went down the tracks on the far side of the mountain to deliver toys and treats to the children who had been waiting, the little engine repeated the phrase, ‘I thought I could, I thought I could’.
In this global market that looks too big for anyone or anything to bring it back to a more stable environment, I think that solid analysis of companies and careful accumulation of underpriced stocks has the potential to yield great rewards. Like the little engine that put its head down and worked at its assignment, the pursuit of fundamental research coupled with an appreciation of the consistency of human behavior should identify the securities that I believe will survive and thrive in the future. Now is the time when some of these companies are on sale. Although no one knows precisely when, it is inevitable that these wild bargain prices will at some point in time come to a close. When that happens, and with the benefit of 20-20 hindsight, many investors will wish they had accumulated a bigger stake in these bargain companies.
Read the full report (pdf)
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