David Fingold, vice-president and senior portfolio manager at Dynamic Funds
Focus: U.S. and global equities

MARKET OUTLOOK

As bottom-up stock pickers, we don’t make market calls. We have no targets for market averages and do not manage money relative to the indexes. Our funds, the Dynamic Global Dividend Fund, the Dynamic American Fund and the Dynamic Global Discovery Fund invest in a concentrated portfolio of high-quality companies that we think will do well over the next three to five years. We also offer Dynamic Global Asset Allocation Fund, a balanced fund with a concentrated portfolio of equities and fixed income.

When we own companies that are in cyclical industries, we do have a positive medium-term view of the industry. The industries we presently like include, but are not limited to life science tools (Danaher), construction (Belimo), defence (Elbit Systems), semiconductors (Inficon), composite materials (Schweiter) and many others.

Many of the industries we’ve invested in are not deeply cyclical. They include, but are not limited to cleaning supplies (Ecolab), coffee (Strauss), animal health (Zoetis), payments (Visa) and many others.

When we’re negative about an industry, we don’t invest in it at all and assess the impact of negative developments in that industry on our other investments. We’re presently negative about commercial aerospace, automotive, energy and mining. We’re also concerned about the extremely high valuation and lack of growth of companies in the utility and REIT industries and therefore have no investments there either. The fixed income positioning of the Dynamic Global Asset Allocation Fund is zero weight corporate bonds and no exposure to duration. Our favored currencies are the U.S. dollar, Japanese yen and Swiss franc.

Investors should consider whether they are taking appropriate risks with respect to commodity prices, interest rates and currencies. Most investors do not: They buy the index or use a closet index portfolio manager and take risks they don’t understand.

Simply put, we invest in companies we like and have no exposure to developments in the global economy that concern us.

TOP PICKS

David Fingold's Top Picks

David Fingold of Dynamic Funds shares his top picks: Elbit Systems, Progressive Corporation and Hoya Corporation.

ELBIT SYSTEMS LTD (ESLT.O)

Elbit is a Haifa, Israel-based manufacturer of military hardware. Their product lines include: unmanned systems, electronics including fire control, software-defined radios and radars, and cyber. The cyber division supplies signals intelligence hardware and software used by the military and domestic security forces of friendly nations. Elbit is well positioned to benefit from the growth of unmanned systems, including the replacement of older drones. Generally, electronics spending grows at twice the rate of the growth of defence budgets. The recent acquisition of Israel Military Industries expands their product line into munitions, armour, light and medium arms and rockets. Recently, backlog rose to a record level of $9.4 billion.

PROGRESSIVE CORPORATION (PGR.N)

Progressive is a Mayfield Village, Ohio-based property and casualty insurer. They have a record of sound underwriting, low operating costs and above-industry growth. With the current low interest rates, insurers have to earn profits from underwriting, not interest income. This has led to a firm market that hardens with each catastrophe. Last year, their (adjusted) combined ratio was 90 per cent and return on equity was 30 per cent. They have been growing net premiums written at around 15 per cent, while the industry is growing in the mid-single digits range.

HOYA CORPORATION (HOCPY.PK)

A Tokyo, Japan-based producer of optical products, Hoya is a leader in health sciences, including endoscopes and lenses for vision correction. They also have a significant position in information technology. They dominate photomasks for the leading edge nodes of semiconductor manufacturing and hard disk platters for high-capacity drives. They have an excellent long-term record of capital allocation, including acquisitions, dividend growth and share repurchase.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
ESLT Y Y Y
PGR Y Y Y
HOCPY Y Y Y

 

PAST PICKS: AUG. 20, 2018

David Fingold's Past Picks

David Fingold of Dynamic Funds reviews his past picks: Straumann Holding, Zoetis and Strauss Group.

STRAUSS GROUP (STRS TLV)

  • Then: 7,778 Israeli shekels
  • Now: 10,670 Israeli shekels
  • Return: 37%
  • Total return: 40%

ZOETIS (ZTS.N)

  • Then: $92.16
  • Now: $115.70
  • Return: 26%
  • Total return: 26%

STRAUMANN HOLDING (STMN SWX)

  • Then: 785 Swiss francs
  • Now: 813 Swiss francs
  • Return: 4%
  • Total return: 4%

Total return average: 23%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
STRS Y Y Y
ZTS Y Y Y
STMN Y Y Y

 

FUND PROFILE

Dynamic Global Dividend Series F
Performance as of: June 30, 2019

  • 1 month: 2.6% fund, 3.1% index
  • 1 year: 15.7% fund, 6.2% index
  • 3 years: 17.7% fund, 12.5% index

INDEX: MSCI World CAD Index.
Returns are based on reinvested dividends, net of fees and annualized.

TOP 5 HOLDINGS

  1. Mastercard: 4.9%
  2. Microsoft: 4.8%
  3. Progressive: 4.7%
  4. McDonald’s: 4.5%
  5. Disney: 4.1%

WEBSITE: dynamic.ca
TWITTER: @dfingold