The top-down macroeconomic themes all tilt in favor of globally diversified cash-rich companies, according to Karl O. Mills, president and chief investment officer at Jurika Mills & Keifer LLC.
At issue is “massive public debt here and in Europe, and the only real solution is going to be through innovation,” he said.
With that in mind, Mr. Mills isn't a fan of U.S. consumer-discretionary stocks, but he does like leading technology firms such as QUALCOMM Inc. [Ticker:(QCOM)].
“I think technology is the best place to be in the whole market right now,” he said.
Mr. Mills, who also manages the advisory firm's Counterpoint Select Fund [Ticker:(CPFSX)], uses that top-down research as a guide to picking stocks in the hyper-concentrated 20-stock portfolio.
He makes no apologies for his investment conviction or the fund's 500% turnover rate last year.
“Sometimes it pays to take a different view of the market, and we'll often go to where other people don't want to be,” Mr. Mills said.
He is bullish on health care and thinks that a lot of U.S. investors are missing the big picture.
“Right now, most people are viewing health care in terms of the efforts at U.S. health care reform, but most of these companies are global,” Mr. Mills said.
This explains why Pfizer Inc. [Ticker:(PFE)] is one of his largest holdings.
The Blackstone Group L.P. [Ticker:(BX)] is Mr. Mills' play on cheap assets across the financial services industry.
“It's not a great time to be a seller, but it's a great time to buying, and a company like Blackstone, which has lots of cash, is in a great position to buy,” he said.
The fund, which earned a five-star rating from Morningstar Inc. on its third anniversary in November, has also been known to load up on cash as the markets get too risky.
Going into the fourth quarter of 2008 the fund was 50% in cash, which was gradually trimmed leading up the inauguration of President Barack Obama in January 2009, after which Mr. Mills moved back to the sidelines until April.
“We combine our point of view of the world with fundamental research,” Mr. Mills said. “We have no mandate that says we have to be fully invested.”
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