Chinese Economy
One area where Samra’s not rushing to invest is China. He says the economy may have already stopped growing and valuations are “not even close” to enticing.
As for oil, the other obsession of global markets this year, Samra says it’s probably time to get bullish. Growth in production has stopped and the lower prices will make substitute energy sources less attractive, he said. West Texas Intermediate traded near $30 a barrel on Tuesday, and has fallen more than 50 percent since June.
Samra’s main fund, which he manages with Daniel O’Keefe, beat 92 percent of peers over the past five years and 74 percent in 2016, data compiled by Bloomberg show. Samra and O’Keefe ranked in the top percentile with a 31 percent gain when they won Morningstar’s U.S. manager of the year for international stocks in 2013, according to the fund-ranking firm. They took top honors in the same segment in 2008 when the Artisan International Value Fund lost 30 percent.
Creating Bubbles
Samra says he’s doubtful about central bank monetary policies after the financial crisis. Japan, already buying unprecedented amounts of bonds to stimulate its economy, said last month it would move to negative interest rates. European Central Bank President Mario Draghi says more easing could come as soon as March.
“The world is not right,” Samra said. “You always run this balance between creating social unrest and creating bubbles, and we’ve erred on the side of creating bubbles," he said. “We’ve had distortion after distortion after distortion. And we keep applying more aggressively the same remedies and causing more distortions.”
Still, the former Harris Associates fund manager says his stocks are trading at high discounts to what he sees as their value, and the turmoil means it’s time to make money.
“You need a personality that can take the emotion and noise out of the equation,” he said. “We’ve got the contrarian streak” of buying things others want to offload, he said. “And we’ve got the conservative nature that we want to make sure that if we don’t get the analysis correct, we don’t get slaughtered.”