In this series of short profiles, we ask leading fund managers to defend their investment strategies, reveal their views on cryptocurrency, and tell us what they’d never buy.
In the general sense, technology always holds the biggest promise but is not limited to any particular sector. Advancements are accelerating in pace and diversity and now include almost every touchpoint in our everyday lives. From the mundane to extraordinary, discovery to application, technology remains a key differentiator and, as it has in the past, will have a profound impact on our future.
As a generalist rather than a specialist, it would follow that for us the general technology sector as a whole offers the most tempting of choices. We tend to invest in more mature technology businesses, but for those who may have greater insight into potential transformational change in any particular field, the choice may be more granular, and may allow them to deliver good returns by investing in earlier stage, more binary opportunities which we would find too risky for CGI’s portfolio.
What’s the Biggest Economic Risk Today?
This largely depends on the timeframe. In the near to medium term, it is likely interest rate policy. We are currently in a period of flux, transitioning from a prolonged, extremely low interest rate environment with a recently elevated inflation rate to a somewhat indeterminable future.
A delicate balancing act is required of Central Banks to stabilise economic activity without catastrophic consequences. In the longer term, the biggest risk to the economy is geopolitical. Along with risks associated with conflict, the use of trade as a political tool has increased substantially. An escalation in either of these issues has been shown to have a greater impact on the supply-demand dynamic as well as on the theoretical efficiency metric as the world has become more integrated over time and would disrupt and bridle economic growth potential.
Describe Your Investment Strategy
Canadian General Investments Limited provides investors with an easy and unique opportunity to obtain a broad exposure to the Canadian equity market and can be viewed as a “proxy” for Canada. The portfolio is actively managed so is different than its benchmark but maintains similarities as to incorporating diversification. Focussed on the long term, we select investments using a combination of top-down and bottom-up strategies.
We are biased to bottom-up because, over time, this has been shown to uncover opportunities that have contributed outperformance. Portfolio turnover is kept extremely low and holdings are held in a moderate range of 50-65 in an effort to beat the market rather than just become the market. We keep cash at minimal levels and are committed to maintain a fully invested positioning in the portfolio.
Which Investor(s) Do You Admire?
There have been many and the number will continue to grow. The best investors observe and learn from various sources in formulating their own perspectives and ideas.
Name Your Favourite ‘Forever Stock’
Forever would depend on one’s definition. We have held a few investments in the fund for over a decade including representation in our world class Canadian banking sector such as Royal Bank of Canada RY and Bank of Montreal BMO and Toronto Dominion Bank TD. In addition, we have others like Franco-Nevada Corporation FNV and Canadian Pacific Kansas City Limited CP. Although there is no current intent for elimination of any of our holdings of this type, I wouldn’t be able to put the “forever” tag on anything as the pace of change in the world continues to accelerate and the ability to adapt remains key.
What Would You Never Invest In?
I would never invest in anything that I can’t formulate a reasonable understanding relative to the investment perspective.
Growth or Value?
There are opportunities in both growth and value but our long-term focus leads us to favour growth in return in respect of both capital and income metrics.
House or Pension?
In Canada, owning a house has not only provided shelter but has also been shown to be a very good investment so the combination probably edges the pension alone.
Crypto: Brilliant or Bad?
The underlying Blockchain technology as a platform is brilliant but the Crypto application at this stage is not at a place where we would consider it a viable investment.
What Can be Done to Improve Diversity in Fund Management?
There are a number of initiatives underway to address diversity in many industries and everyday life, including Fund Management, but it will take time to evolve. It would help to have more industry initiatives to introduce investing ideas and fund management as a career into schools and colleges.
While professional investing is a rewarding and stimulating career, all individuals need to understand how to manage their financial goals and liabilities – in that sense, a good understanding of finance and investment is also an important life skill. Engaging while children are still at school, particularly at compulsory school age, which in Canada is up to 18, would tackle both industry and national needs.
Have you Ever Engaged With a Company and Been Particularly Proud (or Disappointed) of the Outcome?
We tend to be more of a passive investor regarding direct engagement. We take meetings and follow companies through a network of brokerages, analysts and other investors in order to make our initial assessment decision as well as monitoring events and issues that may arise subsequent to making an investment.
It is our belief that we are buying into and aligning ourselves with the skills, expertise and operational capabilities that reside within the companies themselves but also consider and incorporate corporate culture and behaviour so as to ensure high standards are kept in agreement with our principles.
We rarely see benefit in engaging publicly – that tends to encourage emotion which can cloud rational decision making for both companies and investors. It is better to remain rational: if a conflict or issue should arise, we would investigate to see if, when and how it is to be resolved and, if not satisfied, we would prefer to exit the position.
What’s the Best Advice You’ve Ever Been Given?
The best advice given to me comes from childhood Boy Scout days and is the motto “Be Prepared”. Simple but extremely effective and something anyone can apply to almost any life situation including investing – even the best performing stocks can have their negative surprises.
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
