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Stan Wong, portfolio manager and senior wealth advisor with the Stan Wong Group at Scotia Wealth Management in Toronto.The Globe and Mail

Money manager Stan Wong isn’t the type of investor who hangs on to a stock, for better or worse.

“I would never want to stay married to a stock or a company because circumstances can change,” says Mr. Wong, a portfolio manager and senior wealth advisor with the Stan Wong Group at Scotia Wealth Management in Toronto.

He’s more of an active trader seeking stocks that have carved out competitive advantages in their industries or operate with few competitors.

“That allows them to maintain pricing power and protect their margins. I find this crucial for long-term stability and performance,” says Mr. Wong, who oversees about $600-million in assets.

His investment approach is based on a combination of macroeconomic, quantitative and technical analysis, which he uses to understand good market exit and entry points.

His all-equity portfolio, which includes about 30 to 35 stocks, has returned 25.3 per cent over the past year. Its three-year annualized return is 14.6 per cent, and the five- and 10-year annualized returns are 15 per cent and 15.5 per cent, respectively. The performance is based on total returns, gross of fees, as of Sept. 30.

The fund’s current equity mix includes 59 per cent U.S. stocks, 28 per cent Canadian and 6 per cent international, as well as 7 per cent in cash. Its top five holdings include Alphabet Inc. GOOGL-Q, Amazon.com Inc. AMZN-Q, Caterpillar Inc. CAT-N, Dollarama Inc. DOL-T and Manulife Financial Corp. MFC-T.

The Globe spoke with Mr. Wong recently about what he’s been buying and selling.

Name three stocks you own and would recommend for new clients.

Amazon is a stock we’ve owned since October, 2018 at about US$86 a share. The stock has been through a few highs and lows in recent years, particularly with the broader drop in technology stocks a couple of years ago, but has since recovered. We see it as a company that will continue to grow over the long term.

Amazon is one of those companies we like because it’s in a league of its own. It’s a behemoth and has established itself as a dominant force in e-commerce and cloud services, digital streaming and artificial intelligence to a certain degree. A significant factor contributing to the company’s success is its Prime membership program, which has more than 200 million subscribers worldwide. Prime is more than just a subscription service. It also fosters customer loyalty and generates cross-product revenue for the company. We see a projected annual earnings growth rate of more than 30 per cent over the next several years for the company.

Dollarama is another stock we’ve traded on and off since April, 2015. We started buying it around $23 a share. The company has established itself as the go-to discount retailer in Canada. It has more than 1,500 locations across the country and plans to expand to 2,000 by 2031. It also has very few competitors compared to the discount retail landscape in the U.S.

The company is showing impressive revenue growth and profitability due to its strategic expansion and widening variety of products. As a dominant player in Canada’s discount retail sector, Dollarama can also take advantage of economies of scale, which helps grow its margins. Its range of affordable products resonates with budget-conscious consumers, especially during economic uncertainty. The company’s business model has also proven to be very resilient in tougher economic times.

Eli Lilly and Co. LLY-N is a stock we bought in the summer at around US$783 a share. It’s a powerhouse in the pharmaceutical industry, leading the charge in developing more innovative medicines across key areas such as diabetes, obesity, oncology, immunology and neurosciences. The company shines in the diabetes and obesity treatment markets with its Mounjaro and Zepbound medications. We also own Novo Nordisk A/S NVO-N, which is behind diabetes and weight-loss drugs Ozempic and Wegovy. Research shows these drugs can help with other ailments, such as cardiovascular disease. So, that’s another segment that can help gross margins, which are already at an impressive 80 per cent for Eli Lilly. That kind of profitability gives the company more resources for research and development, which in turn can fuel more innovation. Eli Lilly and Novo Nordisk are companies that should also benefit from demographic trends around the world, including an aging population and rising rates of chronic diseases and obesity.

Name a stock you’ve sold recently.

Palo Alto Networks Inc. PANW-Q is a stock we sold last month after generating a profit of 22 per cent in about six months. We sold the stock to buy another cybersecurity company, Crowdstrike Holdings Inc. CRWD-Q, shortly after it took a hit due to a software outage in July. We saw Crowdstrike as a better growth opportunity because the stock was so cheap, especially after generating a strong profit on Palo Alto. Sometimes, when we sell something, it’s not because we don’t like the company but because we have only so much room in our concentrated portfolio of 30 to 35 stocks.

This interview has been edited and condensed.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 06/11/24 4:00pm EST.

SymbolName% changeLast
GOOGL-Q
Alphabet Cl A
+3.99%176.51
AMZN-Q
Amazon.com Inc
+3.8%207.09
CAT-N
Caterpillar Inc
+8.74%416.88
DOL-T
Dollarama Inc
-0.67%148.49
MFC-T
Manulife Fin
+5.01%43.57
LLY-N
Eli Lilly and Company
-3.68%776.38
NVO-N
Novo Nordisk A/S ADR
-4.33%105.36
PANW-Q
Palo Alto Networks Inc
+5.16%385.18
CRWD-Q
Crowdstrike Holdings Inc
+4.04%320

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