On April 7th, we had the rare opportunity to hear from money managers who make the day to day decisions on what to buy and what to sell in the funds they manage.
In January when we were originally planning the event, we were coming off a great year of market highs and the plan was to center the meeting around the topics of an election year. We had no idea that we would experience this significant market downturn, caused by a virus and not by a fundamental economic issue.
Presentation by the Money Managers
We were joined by Dunham money managers, Dave Torchia, partner and portfolio manager at Stone Harbor, a fixed income credit specialist in New York; and by Scott O’Gorman, of Bethesda, Maryland with Ithaka LCG, doing bottom pure stock picking through concentrated growth investing.
Dave addressed the International bond market which gives him a world view. This is a great perspective during this pandemic which is affecting all corners of the globe. Dave has been implementing a global multi-sector strategy. In the current environment he has made significant changes to his portfolio.
Scott’s portfolio normally invests in just 30-35 stocks, while most competitors of his fund invest in 100-150. This method is called concentrated, and Scott’s fund began doing concentrated investing before concentrated was cool. Scott’s goal is to find quality companies that have strong balance sheets, strong cash flow. Scott is happy with their current holdings and has made only a few changes.
But Scott reminds us that no one really knows what will happen. This is after all an election year. “Love or hate Trump, he is good for Equity markets. Looking to the future it is easy to be negative. The more difficult job is to be bullish. This country has companies that add ingenuity. Things that need considered are if we have good jobs number and how fast are people get a paycheck? When are we going to re-open, will it be slow? Will people spend or save more knowing that they could be furloughed? Will we foresee more regulation? This could hurt companies like Facebook and Google”.
Implications of an Election
Dave reminds us that political risk in important in an International or world bond fund. An election between Biden and Trump may not matter, but it would matter who won if their policies affected interest rates.
All in all, the managers are hopeful that the world will respond positively as the current Coronavirus pandemic eventually ends; but with no crystal ball many things could happen in the interim to effect the various economic indicators.