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David Burrows
President & Chief Investment Strategist at Barometer Capital Management
Member since: Jun '01 · 5014 Opinions
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| 4.6 | 220 29.06% | 199 26.29% | 119 15.72% | 119 15.72% | 100 13.21% | ||
| 1 Month | 4.44 | 5 2.86% | 62 35.43% | 71 40.57% | 27 15.43% | 10 5.71% | |
| 6 Months | 4.6 | 32 18.82% | 57 33.53% | 25 14.71% | 39 22.94% | 17 10.00% | |
| 12 Months | 4.71 | 55 33.54% | 39 23.78% | 12 7.32% | 27 16.46% | 31 18.90% | |
| 2 Years | 4.71 | 62 42.47% | 31 21.23% | 9 6.16% | 17 11.64% | 27 18.49% | |
| 5 Years | 4.55 | 66 64.71% | 10 9.80% | 2 1.96% | 9 8.82% | 15 14.71% |
Stock Opinions by David Burrows
His view is that since the generational low in rates in the early part of 2020, everything has changed. For 40 years, the power was in the hands of the borrower, and we went to a world where the power is in the hands of the lender. The economy is likely a lot more resilient in the face of inflation or higher interest rates.
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It means that the things that benefited from falling rates, which are pretty over-owned, are not likely the places where you'll make money. Things like high-dividend-paying stocks, with lots of leverage and that generate a relatively small but steady return on capital, are not as attractive. Because as the cost of capital goes up, they're not going to grow their dividends. This includes utilities, REITs, telecoms, staples.
On the other hand, companies that have the ability to set price, and generate lots of excess cash, are more likely to return it to shareholders in the form of a rising stream of dividends. There's no question that we're going to have a higher cost of living, and so we need a rising stream of dividends. There are very specific companies and industries that are really well suited to that. You just have to get your head around the fact that the world is just a different place than it was before 2020.
People have been waiting for this recession, and piled into defensive sectors, but they're just not working and are now over-owned. Sectors that didn't do well for a decade, like financials in the US and around the world, as well as energy, materials, industrials, are all under-owned and unloved. But that's where the relative strength is.
If you look at a chart that depicts results from a Fund Manager Survey, you can see where investors are overweight. Bonds, in particular, are overweight, as investors talk about bond prices going higher when rates go lower. The truth is that other things will add more value. For example, in the last 12 months the aggregate US bond index has been up 1.7%, but the world of dividend growth stocks is up 24-25%.
We're in a different world, and both institutional and individual investors need to do some repositioning.
For a year now, he's been talking about buying large, cashflow-producing, resource producers. Names like CNQ and TECK.B. They represent one important component where we can get inflation protection.
People think about risk as prices fall. You have to remember that risk is also inflation eating your money. So you need to own things that protect you from that risk, and it's something we haven't had to think of much for the last 15 years.
The structural backdrop includes a lot of spending on construction and on US manufacturing facilities. Much better supply/demand for energy and materials than we've had in a decade. These are all customers of FTT.
If you look at the performance of CAT, FTT and TIH over the last year, all look very attractive. TIH does more construction, whereas FTT does more materials and so he'd lean more toward that one.
The structural backdrop includes a lot of spending on construction and on US manufacturing facilities. Much better supply/demand for energy and materials than we've had in a decade. These are all customers of FTT.
If you look at the performance of CAT, FTT and TIH over the last year, all look very attractive. TIH does more construction, whereas FTT does more materials and so he'd lean more toward that one.
The structural backdrop includes a lot of spending on construction and on US manufacturing facilities. Much better supply/demand for energy and materials than we've had in a decade. These are all customers of FTT.
If you look at the performance of CAT, FTT and TIH over the last year, all look very attractive. TIH does more construction, whereas FTT does more materials and so he'd lean more toward that one.
Had a tremendous run, so he took the position size down a little while ago because it got too large. It's one you have to own as a proxy for building the power to build the models for machine learning. A generation ahead of anyone else in chip architecture and software. Expensive, but growing rapidly, deserves the move higher that it's had. Prefers it to AMD.
AMD is a bit of a show-me story.
A bit of a show-me story.
NVDA had a tremendous run, so he took the position size down because it got too large. It's one you have to own as a proxy for building the power to build the models for machine learning. A generation ahead of anyone else in chip architecture and software. Prefers it to AMD.
Tech is not the only place to be. A lot of people are really overweight. He has about a 50% weighting. There's been some deterioration under the surface in some of the weaker companies. Just know that there are other things you can do.
Really likes the machinery companies. Remarkable turnaround, tailwind in general. Doesn't have a problem with it. Instead, he owns ETN and IR.
From a thematic standpoint, his firm is about a 1/3 weight in healthcare, so pretty underweight. Across the group, there are a few specific pharma companies, like LLY, that are really knocking the cover off the vault. And a bunch not doing so well.
Biotech and medical devices have been sort of sloppy. Now there's trouble with some of the managed-care companies. In general, even though the XLV price is moving higher, relative strength vs. the rest of the market has been hitting YTD lows. Underperforming sector. Better places to focus right now.
Yes, but relative strength has been weakening since December for the group. His firm is about a 1/3 weight in healthcare, so pretty underweight. He often finds that if a company has a questionable technical setup, a little bit of bad news goes a long way.
In a world where there's lots of choice and you only need 20 names to build a portfolio, perhaps you don't need to focus in this sector right now.
We're at a point in the market where this type of thing will come out. Be careful with these types of reports. It could be that whoever wrote the report has covered his short by now.
He likes the engineering group. Give it some space, 4-5 days, to see if things firm up. Pick a stop, and then see what happens over the next few days.
Two months ago, he held it, but has since sold. Headwinds such as food pricing power are longer term, not just a short-term blip. If something isn't working in a bull market, consider moving on. For a company that's a perennial winner, by the time it misses, it's pulled reserves out of every pocket it has to make numbers, but still misses.
