Larry Sarbit is best known for sitting on large amounts of cash when others are actively buying equities. But lately, he's been busy snapping up U.S. stocks. In fact, his fund, IA Clarington Sarbit U.S. Equity, is now 80 per cent invested in 21 U.S. stocks - and he's not finished buying.
Over time, Mr. Sarbit's funds have beaten or came close to outpacing benchmark U.S. indexes after fees. So what makes the U.S. stock market so attractive right now to the veteran fund manager - and where can the best deals be found?
Here's a transcript of our one-hour discussion with Mr. Sarbit on April 28.
11:52 Darcy Keith - Good morning everyone and welcome to this live discussion with Larry Sarbit, who runs the IA Clarington Sarbit U.S. Equity fund. I'm Darcy Keith, an editor with the Globe and Mail.
12:00 [Comment From Larry Sarbit]/b>
Hi Darcy--thanks for the invitation
12:02 Darcy Keith - Just to start things off Larry, I'm wondering what your latest view is overall on the US stock market. Nasdaq, the Dow....they are back at multi-year highs. Are things getting too frothy you think overall?
12:03 [Comment From Larry Sarbit]/b>
I think there are still bargains in the US market even with the big recovery in the market--you have to be selective.
12:04 [Comment From Bill ]/b>
Coinstar is one of your picks. What kind of a time horizon do you see on that in a niche that probably won't exist in 3 years? Think VHS tapes about 12 years ago!
12:06 [Comment From Larry Sarbit]/b>
I am not sure I agree that we won't be renting DVD's in 3 years--think 5-10 years. Redbox rents new movies at $1 per night--no one streams new movies for that price--extremely competitive.
12:06 [Comment From Fred ]/b>
The electricity of America remains largely based on coal generators. Where do you see the best future stock increases, in wind, or solar, or nuclear, or in so-called "clean coal" technologies?
12:08 [Comment From Larry Sarbit]/b>
This is outside of my circle of understanding--I don't like businesses where the underlying business model is changing and doing so rapidly. As a society, we will all benefit from all this development long term but who will the winners be? I don't know.
12:10 Darcy Keith - For us Canadians, no discussion on buying US stocks would seem complete without bringing up the currency. What is your view on where the loonie may be heading, and do you advise investors to participate in any hedging at this stage?
12:12 [Comment From Larry Sarbit]/b>
My view is that the US/Cdn $ relationship will fluctuate!! I hedge the currency because I don't know where it will go. We just want to make sure our clients don't lose money and unhedged, that can happen. For us, it's a long term strategy.
12:12 [Comment From Tony ]/b>
Last quarter Coinstar had some issues with inventory management re RedBox which effected earnings. Do you expect Coinstar to report solid earnings tonight?
12:14 [Comment From Larry Sarbit]/b>
Short term quarterly numbers are definitely not my specialty. Long-term, they will sort out the inventory issue. This has arisen because of the rapid growth in the business and will be sorted out, probably not in one qtr.
12:15 [Comment From Louise ]/b>
Your success rate overall in picking stocks appears impressive. Have you ever made a regretted "bad call" in the past year? If so, was there any lesson in it you could share?
12:17 [Comment From Larry Sarbit]/b>
There isn't enough space here to talk about my mistakes!! The quality of the people running the business has been a problem for us in the past. As a result, we brought on our investigative journalist, Harvey Berkal to, in part find out who the management and Board of Directors are--do they have bad past behavior?
12:18 [Comment From Jonathan ]/b>
With the end of Q2 coming up, broadly speaking, how do you think this will effect the US and CDN markets?
12:19 [Comment From Larry Sarbit]/b>