The Mackenzie Cundill Team is finding ways to make money in stocks that have suffered from massive negative sentiment when disruptors such as Tesla, Netflix and Amazon enter a market creating the belief that these companies will win all the spoils and eventually “own” the market, thus destroying business models and stock prices. The Team has been able to take advantage of overreactions by investors to find good value in beaten-up companies such as Fiat Chrysler Automobiles (a perceived Tesla victim), 21st Century Fox (a perceived Netflix victim) and Advanced Auto Parts (a perceived Amazon victim).
We sat down with the Mackenzie Cundill Team leads to understand how they are managing the volatility in global stock markets and how they are positioning their funds.
Equity markets rebounded meaningfully in the first quarter from depressed levels in December. The sell-off in November and December was excessive due to a global growth scare.
The dispersion between the performance of growth and value is at its highest level in years while value is at its lowest. Trends do not continue forever but the key is to know the catalyst that could alter that trend.
This past quarter was headlined by a number of market concerns: eleventh hour NAFTA negotiations, the new Italian government’s budget, on-going Brexit negotiations, and more trade war tensions between China and the U.S. There has been increased volatility in stock prices.
Global capital markets in the second quarter have been dominated by continued threats of trade war, political uncertainty in Europe and developments in the energy markets.