David Fingold, vice president and senior portfolio manager of 1832 Asset Management

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 don't manage money relative to the indexes. We invest in a concentrated portfolio of high-quality companies that we think will do well over the next three to five years. Our most concentrated funds such as the Dynamic Global Discovery Fund own 20 companies, while a more diversified portfolio like the Dynamic Global Dividend Fund owns 25 companies. We also offer the 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 (Thermo Fisher), construction (Belimo, Sika), defense (Elbit Systems), semiconductors (Inficon), composite materials (Schweiter) and uniform rentals (Cintas).

Many of the industries we have invested in aren’t deeply cyclical. They include, but are not limited to:  Food ingredients (Chr. Hansen), coffee (Strauss), medical technologies (Becton Dickinson), health insurance (UnitedHealth), animal health (Zoetis), payments (MasterCard), and pest control (Rollins).

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 and therefore have no investments there at all. We’re also concerned about the extremely high valuation and lack of growth of companies in the utility and REIT industries and have no investments there. 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, the Japanese yen and the Swiss franc.

Investors should consider whether they’re taking appropriate risks with respect to commodity prices, interest rates and currencies. Most investors don’t. 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

STRAUSS GROUP LTD. (STRS IT)

Based in Petah Tikva, Israel, Strauss is a manufacturer of Middle Eastern salads and dips, coffee, water purification systems and sweets and salty snacks. Coffee is one of the fastest growing food categories. Strauss recently purchased full ownership of their coffee division, which is growing strongly in Eastern Europe and South America. The water division is growing strongly in Israel and Asia. The dips and spread business continues to be the North American market leader and has been expanding in Europe and Australia and New Zealand. The Israeli business is a leader in dairy, beverage and snack foods and participates in the strong growth of local consumption driven by immigration. Founded in 1933, its current chairperson is Ofra Strauss, the granddaughter of the founder.

KEYSIGHT TECHNOLOGIES INC. (KEYS.N)

Based in Santa Rosa, California, Keysight provides electronic test equipment. The majority of their business supports wireless network hardware development and deployment, and will benefit from the rollout of 5G wireless. They also provide equipment used in testing and developing microelectronics. An important business segment is defense electronics. They are one of a small group of companies that provides equipment to test and design electronics used in defense applications. They also provide some hardware used for signals intelligence. Originally founded by William Hewlett and David Packard in 1939 as Hewlett-Packard, it was spun out of Agilent in 2014.

HAMAMATSU PHOTONICS (6965 JP)

Based in Hamamatsu City, Japan, it is a producer of semiconductor devices that produce and detect light and ionizing radiation. They have a leading market share in production of photomultipliers and scintillators. They also dominate important niches in X-ray sources, X-ray detectors, image sensors and deuterium lamps. These products are critical components in life science tools, semiconductor capital equipment, measuring while drilling tools and high-energy physics projects. They maintain gross margin around 50 per cent and their operating profit margin is around 20 per cent while investing about 10 per cent of sales in research and development. 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
STRS Y Y Y
KEYS Y Y Y
6965 Y Y Y


PAST PICKS: JAN. 3, 2018

SCHWEITER TECHNOLOGIES (SWTQ SW)

  • Then: ₣1,266.00               
  • Now: ₣849.00    
  • Return:-33%      
  • Total return: -30%

ELBIT SYSTEMS (ESLT IT)

  • Then: ₪46,570.00            
  • Now: ₪42,650.00            
  • Return: -8%       
  • Total return: -7%

KEYENCE CORPORATION (6861 JP)

  • Then: ¥63,120.00             
  • Now: ¥56,450.00              
  • Return: -11%     
  • Total return: -10%

Total return average: -16%

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
SWTQ Y Y Y
ESLT Y Y Y
6861 N N N

FUND PROFILE

Dynamic Global Dividend Series F

Performance as of Nov. 30, 2018        

  • 1 month: 2.0% fund, 2.4% index
  • 1 year: 7.6% fund, 3.9% index
  • 3 year: 12.9% fund, 9.0% index

Index: MSCI World Index hedged to CAD.

Returns based on reinvested dividends, net of fees and annualized.

TOP 5 HOLDINGS AND WEIGHTINGS

  1. Eli Lilly and Company: 5.2%
  2. UnitedHealth Group: 5.2%
  3. Visa: 5.0%
  4. Zoetis: 5.0%
  5. Microsoft: 4.9%

WEBSITE: dynamic.ca

TWITTER: @dfingold

INSTAGRAM: dlfingld