David Samra, awarded for his stock-picking during and after the 2008 financial crisis, says he’s buying again.
Samra, who oversees about $20 billion for Artisan Partners, says now’s the time for a steady hand and no emotion as concern intensifies about the slowdown in China and the sliding price of oil. The winner of Morningstar Inc. international stock manager rankings in 2008 and 2013 says he’s sticking to his investment approach: finding undervalued shares with strong balance sheets.
“We welcome these types of markets,” Samra said in a phone interview from San Francisco on Monday. “We weren’t happy to see the potential social and economic disruption that happened during the financial crisis. It causes a lot of human misery. You’re not existentially happy about what’s going on. On the other hand, that turned out to be a market opportunity.”
Global equities erased $7.7 trillion in value this year through Monday as routs in commodities and Shanghai shares spread, taking global banks as the latest victim. Worldwide stocks neared a bear market on Tuesday as the yen surged and corporate bond risk jumped. The $10.7 billion Artisan International Value Fund, the largest Samra oversees, lost 8.3 percent in 2016 and is still beating about three-quarters of its peers.
Markets had become “very greedy” over the past few years, according to Samra, which he says was time to take advantage and sell shares. In today’s conditions, it’s time to “aggressively buy,” he said. His main fund had 12.7 percent of its holdings in cash as of Jan. 31.
UBS Bet
In UBS Group AG, which has plummeted 26 percent this year, Samra sees his preferred combination of cheapness and a safety buffer. The Swiss bank, the third-largest holding in Samra’s biggest fund, has strong capital levels, a less complex balance sheet and a wealth-management business that’s worth more than the lender’s market value, says Samra, while declining to specify which stocks he’s been buying amid the selloff. Chairman Axel Weber is taking the right approach by prioritizing wealth management over investment banking, he said.
Earlier this month, Credit Suisse Group AG reported its biggest quarterly loss in seven years as it wrote off goodwill and set aside provisions for litigation, sending shares to a 25- year low. A slump in earnings at UBS’s wealth-management and investment-banking divisions also sparked its biggest stock drop in more than a year.
UBS is “way ahead of their competitors, well ahead of Credit Suisse,” Samra said. Short-term headwinds such as declines in assets under management and tougher regulations “don’t undermine the franchise in the long term.”
The International Value Fund had 42 holdings at the end of January, with Compass Group Plc and Samsung Electronics Co. the two biggest holdings, according to information on Artisan Partners’ website.