Between a global pandemic, changing demand for commodities, and an uncertain U.S. presidential election, money managers had to be nimble in 2020.

BNN Bloomberg spoke with six Canadian portfolio managers about their best and worst investment decisions in 2020, and stocks to watch in the year to come.

Interviews have been edited and condensed for clarity.

Darcie Crowe, senior vice president, portfolio manager and founder, Crowe Private Wealth Group within Canaccord Genuity Wealth Management

Best investment decision

“Alternative investments. Over recent years, we have steadily increased our allocations to uncorrelated, alternative assets with lower volatility characteristics designed to deliver stability of returns. These investments protected assets throughout the drawdown of March 2020, greatly improving the investment experience for clients.

These allocations include long and short equity strategies, which rallied throughout March, private real estate, arbitrage opportunities and private debt.”

Biggest investment regret

“Not taking on a greater tilt towards the ‘stay-at-home’ stocks for those clients where it would be within their risk profile.

While we maintain exposure to growth businesses, including those that were significant beneficiaries of the ‘stay-at home economy’, tilting portfolios to take on a greater allocation in hindsight could have been beneficial.”

What to watch in 2021

“We expect a synchronized global recovery to continue into 2021 driven by broad distribution of COVID-19 vaccinations and multiple stimulus measures.

With yields remaining close to records lows, we expect investors will continue to look to alternative investments to drive returns. This will include increased allocation to private debt, private equity and hedge funds.

We also expect to see a world that is more digital and less global as we emerge from the pandemic. We believe positioning for continued technological disruption will be beneficial, particularly in the areas of fintech, health care and green tech.”

Barry Schwartz, chief investment officer and portfolio manager, Baskin Wealth Management

Best investment decision

“The sale of Delta Air Lines Inc. and Hyatt Hotels Corporation in late February and swapping the proceeds for Netflix Inc.

In late February, we could never have envisioned how bad the COVID-19 crisis would get.  At the time, we felt Delta and Hyatt would be severely impacted by a drop-off in business and leisure travel. 

Netflix was a name that we began researching before the pandemic started but we saw an opportunity to purchase the shares at a reasonable valuation.  The share prices of Delta and Hyatt are still well below what we sold them at, and our clients are up close to 40 per cent on Netflix since the initial purchase.”

Biggest investment regret

“Selling shares of The Walt Disney Co. in late March.

As the pandemic worsened in March 2020, we became concerned with our holding of Disney. The sell thesis was clear: all of Disney’s businesses were essentially shut down: theme parks, cruises, movies theatres and no sports on television.

What we did not get right is that great companies adapt. Disney was quickly able to protect its balance sheet and pivot to streaming which has been a huge hit for it and its patient shareholders.”

Stock to watch for 2021

“TFI International Inc. is a stock to watch in 2021. TFI is a large provider of trucking services in North America and has a terrific track record of lean and profitable operations. It has spent years consolidating and building up its same-day e-commerce delivery business.

TFI stands to benefit from tailwinds for online shopping as well as a recovering economy.  In our opinion, it has one of the best management teams in Canada.”

Alexandra Horwood, director of wealth management, portfolio manager and investment advisor, Richardson Wealth

Best investment decision

“The IPO of DraftKings. The stock skyrocketed as high as US$63.78 this year.

We have had similar success investing pre-IPO in Pinterest, up 236 per cent and several exciting high-impact health-care companies.”

Biggest investment regret

“We purchased shares in Space Exploration Technologies Corp. this past summer, and I regret not purchasing more.

Now that Elon Musk has stated that they will be taking Starlink, their global broadband internet business, public, and the beta testing is showing unrivaled speeds, I believe there is so much more potential upside from here with that company.”

Stock to watch in 2021

Medicenna Therapeutics

“Medicenna Therapeutics' trials have shown to increase the life expectancy of patients by two to three times anything on the market and stop the progression of tumour growth, with no toxic side effects.

Appili Therapeutics

Appili Therapeutics’ specialty is bio-tech, fighting infectious disease and it is in stage-three clinical trials to be the “ColdFX” of COVID-19 treatment and prevention. Their drug is already approved in many countries and has been used for years to treat pandemic influenza. It’s more scalable, easy to manufacture, store, ship, and administer orally in pill form than a vaccine which is not scalable, messy to administer, expensive, challenging to store and ship.”

Rafi Tahmazian, senior portfolio manager, Canoe Financial

Best investment decision

“We seeded Headwater Exploration at 92 cents per share and played alongside management at that level in January of last year. This injection of capital set the company up with $115 million of cash prior to COVID. 

With the COVID development, the potential opportunities increased dramatically and in the fall, the company landed on the Clearwater heavy oil play, doing a deal with Cenovus to purchase their lands.  

The Clearwater play is extremely prolific, and we believe is the best oil play across North America. At US$40 per barrel, the play has economics that have paybacks on wells in less than six months, which is unheard of across the industry at that price level.   

With our outlook for oil to be US$55 in late next year, it makes Headwater not just a best idea of 2020 but good potential for 2021 as well.”

Biggest investment regret

“By far our biggest regret was not being more cautious as COVID created the shutdowns in North America back in March. 

Optimally, we could have built cash up more and upgraded to larger more liquid investments where leverage was not as much of an issue. Granted, it was an unprecedented situation, but if you are not learning you are failing in this business.”  

Stock to watch for 2021

“Trican Well Service Ltd. is being priced at approximately 0.6 times book value today, versus its historical price-to-book value of two to 2.5 times. We do not consider two times to be an unreasonable target multiple. 

The underlying horsepower is being priced like it will never have pricing power again which we disagree with.  Services have consolidated dramatically dating back to 2015 when oil prices collapsed.

As a result, we expect pressure pumping availability to tighten up dramatically in the first quarter of 2021 with increased drilling activity from the producers. Given the ESG narrative, dual fuel pumps are a focus for producers – Trican has the largest fleet of dual fuel pumps in the basin, and is one of the only pressure pumpers in a position to accelerate spending on more dual fuel kits.”

Diana Avigdor, vice president, portfolio manager and head of trading, Barometer Capital

Best investment decision

“Veritone Inc. The company began the year as a microcap company and it was coming up on some of our quantitative screens so we started to do some fundamental work.

It was and still is under-covered by the sell side and we determined that they have a compelling product (AI operating system called aiWare) that can easily serve use cases in different industries despite some end markets being significantly impacted by COVID (their content licensing segment has a lot of sports broadcasting exposure, and stadium exposure).

But, the company still managed to grow revenue by 30 per cent this year and has some easy levers to pull to in order to get revenue growth above 30 per cent going forward.

We owned the stock from US$3.50 in April to around US$19 in June, then sold, bought back in during November around US$14 and we still own it today.  This is not for everyone as it is a small cap still in development.”

Biggest investment regret

“Not owning Tesla. Simple and nothing further to say about that.  Just had to hold your nose and buy as there was never a time when you could mathematically justify the purchase.”

What to watch in 2020

“Big picture, we believe we are in the continuation of a structural bull market that began in 2013. Bull markets can last 12 to 18 years and no other time than now has the future looked more uncertain.

However, here are the relevant bullet points so far: unprecedented global liquidity and historically very low yields cannot make you too bearish. Unless something changes on those two fronts, we are likely to continue to like equities.  In the possible scenario of reflation, equities will offer a benefit.

We go into 2021 with portfolios that are well-diversified between growth and cyclicals in order to take advantage of economical rebuild, while at the same time wanting to be invested in the beneficiaries of structural changes in the economy due to technology and renewables – and this is not going to go away any time soon.”

Rob Tétrault, senior vice president, portfolio manager and head, Tetrault Wealth Advisory Group at Canaccord Genuity

Best investment decision

“The best investment decision this year was an asset-allocation decision. Normally we believe in being fully invested, but for the first time in years, we took significant equity off the table for clients in January and February of this year.

Our thinking was that the market was simply getting too frothy for us and we no longer wanted to own some companies at those prices. As we all know, COVID-19 hit and the markets got rocked.

The timing on that trade ended up being absolutely perfect, especially considering we were able to put that capital back in the market a few months later.”

Biggest investment regret

“Not liquidating all of our clients’ portfolios and investing it completely in NIO Inc., Zoom Video Communications Inc., Moderna Inc., and Tesla Inc. All kidding aside, hindsight is 20/20 and it’s remarkably easy to think about the ones that got away.”

What to watch in 2021

“Overall, we think global equities will outperform Canadian equities in 2021. But that’s not sexy enough so let’s talk about speculative sectors that could rally.

First off, for those who really like gambling, the junior mining sector is likely in the third or fourth inning, and some individuals are likely to make a lot of money there, provided they end up selling before the eventual rout.

Second, I believe the psychedelic medicine trade is still in its early infancy, but beware of the cash burn of those companies.

Finally, when everyone writes off a specific sector, it’s usually poised for a rebound. Look for traditional oil-and-gas to get a bounce back year in 2021.”