Brian Acker, president, CEO and chief investment strategist at Acker Finley
Focus: North American large caps

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MARKET OUTLOOK

We believe we’re in the middle stages of a secular bull market in the U.S. dollar (now four years since I first started mentioning this on BNN). This will ignite the rates of return of all U.S. assets, including equities, real estate, etc.

According to Model Price metrics, we believe the S&P 500 has a fair value of 3,400. That’s 25 per cent higher than the index is trading today. Fair value is 3,975 twelve months from Feb. 21, 2019 assuming current earnings estimates.

For a value manager like us, there are many discarded, unloved and broken-down growth story stocks to choose from. If the U.S. economy can struggle along here or, God forbid, accelerates, these value names would produce great rates of return in our opinion.

At the same time, we’re in the midst of ever-increasing interest rates (that is, interest rates in the U.S. are normalizing) and that’s a good thing. Even though it’s 2018, this market has the feel of 1994: our last bear market in fixed income. This U.S. equity market will keep on looking over its shoulder at the U.S. Treasury market.

As interest rates make new highs, U.S. equities go into a spasm, correction, until the U.S. Treasury market settles down. Then equities will try to move higher. Wash, rinse and repeat throughout 2018.

TOP PICKS

CITIGROUP (C.N) 

Last purchase was on June 29, 2017 at US$67.15. Model Price is $76 representing no real upside, but big potential for dividend increases.

INTEL (INTC.O)

Model Price for Intel is $61 representing an upside of 28 per cent.

CISCO SYSTEMS (CSCO.O)

Model Price is $56 representing an upside of 30 per cent.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
C Y Y Y
INTC Y Y Y
CSCO Y Y Y

 

PAST PICKS:  FEB. 6, 2017

CITIGROUP (C.N) 

  • Then: $57.64
  • Now: $76.33
  • Return: 32.42%
  • Total return: 34.53%

AIG GROUP (AIG.N)

  • Then: $64.90
  • Now: $60.17
  • Return: -7.28%
  • Total return: -5.34%

EXXON MOBIL (XOM.N) 

  • Then: $83.31
  • Now: $76.76
  • Return: -7.86%
  • Total return: -3.37%

Total return average: 8.60%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
C Y Y Y
AIG Y Y Y
XOM Y Y Y

 

FUND PROFILE

Acker Finley Select US Value 50 F
Performance as of: Jan. 31,2018

  • 1 Month: 2.97% fund, 3.52% index
  • 1 Year: 17.81% fund, 18.95% index
  • 3 Year: 8.13% fund, 13.41% index

* Index: S&P 500 Total Rate of Returns in Canadian dollars

TOP 5 HOLDINGS AND WEIGHTINGS

  1. Apple: 5.6%
  2. Metlife: 4.8%
  3. Union Pacific: 4.7%
  4. Honeywell: 4.5%
  5. Eastman Chemical: 4.5%

TWITTER: @modelpriceguy
WEBSITE: modelprice.wordpress.com