While many investors were riding out the market volatility in recent months, Stan Wong was actively buying and selling, including in some of the hardest-hit sectors such as travel and leisure.
“At times, the most profitable trades could be in names that may seem very counterintuitive or contrarian,” says Mr. Wong, a portfolio manager at Scotia Wealth Management in Toronto who oversees about $300-million in assets. “I take advantage of prevailing themes and trends happening in the markets. Sometimes things are beaten up too much.”
For example, after the panic market sell-off in the spring of 2020, Mr. Wong bought shares in Air Canada, cruise ship operator Royal Caribbean Group and casino and hotel chain Wynn Resorts Ltd. He still holds Air Canada and has since taken profits in Royal Caribbean and Wynn Resorts.
He also added “growth names” such as big-box retailer Costco Wholesale Corp. and technology giant Microsoft Corp., “which I still continue to hold and accumulate.”
Mr. Wong says he looks for “high-quality names with strong long-term secular growth characteristics,” while avoiding stocks with “unreasonable valuations.”
His holdings are well diversified, including about 72 per cent in U.S. and international equities – mostly U.S. – and 23 per cent in Canadian holdings with the rest in cash. His top sector holdings include technology, communications, health care and financials.
The largest three positions in his portfolio are Facebook Inc. (with a total return of 33.1 per cent for the 2020 calendar year), Google parent Alphabet Inc. (total return of 30.9 per cent) and UnitedHealth Group (21.2 per cent).
Below are three of the latest stock picks from Mr. Wong (performance figures are total returns, as of Jan. 5 close).
Three-month return: 24.7 per cent
One-year return: minus 38.7 per cent
Simon Property Group, a stock Mr. Wong has added to his portfolio in November, is the largest retail REIT with interests in more than 200 properties, primarily in the United States but also in Canada, Mexico, Asia and Europe.
“With recent COVID-19 vaccine breakthroughs and the expectation of an eventual full reopening of the economy, Simon Property shares look attractive given its depressed price,” Mr. Wong says. He also points to the real estate investment trust’s strong distribution yield of 6.2 per cent.
He says the REIT appears poised to grow in the short term, even as e-commerce sales continue to rise. Mr. Wong says Simon Property owns busy properties in attractive, high-quality locations where bricks-and-mortar space is still well used.
Three-month return: 1.3 per cent
One-year return: 16.2 per cent
Mastercard, one of the world’s largest global payments companies, is a stock Mr. Wong has held, on and off, over the years and bought it again in October.
The company has been affected by the drop in economic activity and global travel amid the pandemic. Revenue fell 10 per cent in 2020, but revenue is expected to bounce back by 18 per cent in 2021, Mr. Wong says. Over the next several years, he adds, annualized revenue is forecast to come in at around 15 per cent.
“A return to a more normal economic backdrop will help companies like Mastercard,” he says.
Mr. Wong says Mastercard is also expected to benefit from the continuing shift away from cash and toward digital payments.
Three-month return: 25.4 per cent
One-year return: 1.9 per cent
XLF is a basket of U.S. financial services companies with top holdings that include Berkshire Hathaway Inc., JPMorgan Chase & Co. and Bank of America Corp. Mr. Wong bought in November, seeing a brighter outlook for the sector south of the border.
“Fiscal stimulus, a pretty dovish Federal Reserve, the vaccine rollout and rising long-term interest rates – which are positive for net-interest margins – will help the financial services sector in general,” he says.
What’s more, he says companies held in this ETF have strong balance sheets owing to stringent post-2008 financial regulations in the United States, while a reopening economy and fiscal stimulus are expected to drive loan demand and are likely to limit loan defaults.
“The valuations are decent, especially among some of the larger banks … and I do expect rising share buybacks and dividend payouts over the next year or two,” Mr. Wong says.
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