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 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 the automotive, energy and mining spaces. 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

STRAUSS GROUP LTD (SGLJY OTC)

Strauss is a manufacturer of Middle Eastern salads and dips, coffee, water purification systems and snacks. Coffee is one of the fastest growing food categories and Strauss recently purchased full ownership of their coffee division, which is growing strongly in Eastern Europe and South America. The water division is growing 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.

ELBIT SYSTEMS LTD (ESLT:UW)

Elbis is an 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 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 its backlog rose to a record level of $9.4 billion.

KEYSIGHT TECHNOLOGIES (KEYS:UN)

Keysight provides electronic test equipment. The majority of their business supports wireless network and hardware development and deployment and will benefit from the 5G rollout. They also provide equipment used in testing and developing microelectronics. An important business segment is defence electronics. They’re one of 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 in 1939 as Hewlett-Packard, it was spun out of Agilent in 2014.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
STRAUSS Y Y Y
ELBIT Y Y Y
KEYSIGHT Y Y Y

 

PAST PICKS: OCT. 29, 2018

STRAUSS GROUP (SGLJY OTC)

  • Then: Ils 8,156
  • Now: Ils 10,900
  • Return: 34%
  • Total return: 36%

SCHWEITER TECHNOLOGIES (SONVY OTC)

  • Then: $31.79
  • Now: $45.67
  • Return: 44%
  • Total return: 45%

LONZA GROUP (LZAGY OTC)

  • Then: $30.17
  • Now: $32.06
  • Return: 6%
  • Total return: 7%

Total return average: 29%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
STRAUSS Y Y Y
SCHWEITER Y Y Y
LONZA Y Y Y

 

FUND PROFILE

Dynamic Global Dividend Series F
Performance as of: Aug. 31/19

  • 1 month: 1.1% fund, -0.8% index
  • 1 year: 10.0% fund, 2.8% index
  • 3 years: 17.1% fund, 10.7% index

INDEX: MSCI World (CAD-Hedged).
Returns are based on reinvested dividends, net of fees and annualized.

TOP HOLDINGS

  1. Microsoft: 5%
  2. Abbott Labs: 4.8%
  3. McDonald’s: 4.5%
  4. Costco: 4.2%
  5. Northrop Grumman: 4.1%