Mackenzie Minute: October 19, 2018
Richard Wong from the Mackenzie Cundill Team gives his thoughts on why his team believes that the leadership of the growth style is coming to an end.
RICHARD WONG: It has been a market led by a very narrow group of stocks. But that has been disrupted by a rise on long bond yields as well as a steepening of the yield curve, since about mid- to late- August. In addition to that, global energy prices as well as international energy shares have behaved significantly better and energy as a group, globally, historically is negatively correlated with the technology sector. So, what we think is we’re seeing a shift in the market leadership away from growth and into value stocks.
We think this pullback in the market should be bought. But what one buys matters. We believe the leadership of growth as a style is coming to an end and capital should be put to work in the value style going forward. In terms of opportunities, we’ve been travelling to Oslo and Houston, and we’re finding a lot of deep value opportunities in the offshore services sector globally. We believe that sector will benefit from tight supplies as well as increased drilling activities going forward.
Cundill is a leader in the value and the deep value investment space. We’re not just looking for cheap stocks or beat-up stocks. We are looking for undervalued securities with a strong re-rating potential. At the same time, we are avoiding extremely high-valuation, speculative investments. We believe we are uniquely positioned to benefit from the ongoing shift from growth into value leadership in the marketplace. We’re ready!