Portfolio Manager Perspectives

Jeff Benjamin

It's oil that glitters, not gold, says fund manager

Rogers says investors should jump on stocks, particularly those in the energy sector; bullion lacks ‘any real yield or value'

Sep 21, 2011 @ 12:35 pm

By Jeff Benjamin

Market volatility and continuing macroeconomic threats are not good reasons to move out of stocks — particularly energy stocks — according to Stephen Rogers, manager of the California Investment Equity Income Fund Ticker:(EQTIX).

“U.S. equities are one of the strongest places to be in terms of a core portfolio holding,” he said. “There's no attractive yield in Treasuries, and on a relative basis, stocks are more attractively priced than bonds right now.”

Mr. Rogers has managed the $150 million fund for the California Investment Trust since 2003. His total-return strategy starts with an analysis of the S&P 1500 to build a portfolio of approximately 100 stocks with a 30% annual turnover rate.

A key focus is on undervalued companies with attractive cash flow fundamentals, he said. “We want companies that are interested in returning cash to shareholders in the form of dividends and stock buybacks,” he said. “I like to see management do things with cash that supports shareholders.”

Despite the strength of certain commodities, such as gold, Mr. Rogers calls himself a contrarian with regard to the precious metal.

“Gold doesn't have any yield or any real value beyond that people think it might be a currency one day,” he said.

The place to be, he said, is energy.

“I'm a big fan of large-cap oil,” he said. “Right now, the politics in the U.S. is swinging against the current administration, and that will favor energy exploration.”

With that in mind, he is investing in BP PLC Ticker:(BP), Exxon Mobil Corp. Ticker:(XOM), Chevron Corp. Ticker:(CVX), and Apache Corp. Ticker:(APA).

In the consumer sectors, Mr. Rogers likes names such as McDonald's Corp. Ticker:(MCD) and Starbucks Corp. Ticker:(SBUX) as companies that are “insulated from the macroeconomic issues.”

The fund, which has a five-star rating from Morningstar Inc., is down 2.6% from the start of the year, which compares with a 1.8% decline by the S&P 500 and a 4% decline by the Morningstar large-cap-value category over the same period.

Portfolio Manager Perspectives are regular interviews with some of the most respected and influential fund managers in the investment industry. For more information, please visit InvestmentNews.com/pmperspectives.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

Events

The power of data

Your clients have financial news and data at their fingertips, but donít know how to interpret it. Katy Gibson of Envestnet|Yodlee and Blake Kannady of Envestnet discuss the power of leveraging aggregated data.

Recommended Video

Path to growth

Latest news & opinion

Relying on trainees, Merrill Lynch boosts adviser headcount in 2017

Questions remain about long-term effectiveness of wirehouse's move away from recruiting experienced brokers.

Supreme Court review of SEC judges could roil pending cases

But long-term, the agency may get around questions of constitutionality by changing the way it brings on administrative law judges.

Lightyear Capital takes 50% stake in $9 billion HPM Partners

Private equity backing could fuel acquisitions by the large RIA.

Tax reform: 7 essential strategies for financial advisers

While advisers face the difficult task of analyzing the law's impact, they will also have a significant opportunity to prove their value by implementing money-saving strategies for clients as well as their own businesses.

Tax law: Everything advisers need to know about the pass-through provision

The provision is tricky, but could provide advisers and business-owner clients with sizable tax savings.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print