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

Featured video

Events

What's next at CAIS?

With a strong 2017 behind them, CAIS doesn't want to lose sight of its clients as it embarks on 2018. Matt Brown explains how a new adviser council will help the firm grow in the year ahead.

Video Spotlight

Help Clients Be Prepared, Not Surprised

Sponsored by Prudential

Recommended Video

Path to growth

Latest news & opinion

Regulators showing renewed interest in cracking down on investment fees

SEC, Finra targeting high-fee share classes, 12b-1 fees and failure to give sales load discounts and waivers to investors.

Tax update: Brady says sales tax deduction in final bill

Taxpayers will be able to deduct state income taxes or state sales taxes in addition to property levies — up to a $10,000 cap.

Complexity of new indexed annuities causing concern

Insurers are using 'hybrid' indices as a way to differentiate themselves, but critics contend the products are less transparent, more confusing and don't add financial benefit.

Critics say regulation hasn't curbed overly rosy projections for indexed universal life insurance

They say rule didn't go far enough and more stringent measures may be necessary.

Broker, retirement groups make last-minute pleas to change tax legislation

Pass-through provisions are target of groups representing employee-model brokerage firms, as well as retirement plan advisers.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print