Greg Newman of Scotia Wealth Management.The Globe and Mail
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Despite the market volatility and lingering fears of an economic downturn, money manager Greg Newman still believes we’re in a bull market.
“Every time there’s an erosion in the market, as there was late last year, you have to ask yourself, ‘Is this the beginning of a bear market or is this just something that can help me score points in my portfolio?’” says Mr. Newman, a senior wealth adviser and portfolio manager with The Newman Group at Scotia Wealth Management in Toronto.
To Mr. Newman, whose team oversees about $1-billion in assets, the answer is “scoring points,” which means seeking out specific companies that look attractive and he expects to perform well over the long term.
“I don’t know whether the markets are going to have a great year, but I do see good opportunities,” he says.
His model all-equity portfolio was up 17 per cent over the past 12 months, as of Jan. 19, and has seen an annualized return of 11 per cent since inception in January, 2013. The performance is based on total returns, net of fees. Asset allocation will vary depending on a client’s risk tolerance.
The Globe and Mail spoke with Mr. Newman recently about what he’s been buying and selling:
Describe your investing style.
I would describe it as opportunistic. It’s not just value or growth; it’s a bit of everything. We look for a catalyst, something that’s coming that the market isn’t paying as much attention to, as we believe it should. Our core portfolio includes mostly large, blue-chip and dividend-paying stocks such as Brookfield Infrastructure Partners LP BIP-UN-T, Sun Life Financial Inc. SFI-T, Manulife Financial Corp. MFC-T and Citigroup Inc. C-N in the U.S., to name a few. We also have some higher-risk stocks, such as Tesla Inc. TSLA-T, Shopify Inc. SHOP-T, Amazon.com Inc. AMZN-Q, Nvidia Corp. NVDA-Q and TFI International Inc. TFII-T.
What’s your take on the current market environment?
The crowd is right; it looks more like the economy is heading for a soft landing. That said, I wouldn’t be surprised to see inflation not fall as fast as many hope, which means interest rates could still be higher than what we’ve been used to before they started rising in 2022. The markets might not have a great year because of that, but I see good opportunities in certain areas in the months ahead.
What have you been buying or adding?
We’ve been adding to names such as Rogers Communications Inc. RCI-B-T, Brookfield Infrastructure and some of the “magnificent seven” names such as Amazon, Meta Platforms Inc. META-Q and Nvidia. With the technology names, we think there’s a lot of growth to come, especially given the opportunities with artificial intelligence. With Rogers, we think the company trades at a reasonable valuation given the growth estimates, especially compared to its industry peers. We also like Brookfield Infrastructure’s projected growth and believe it trades at a reasonable valuation. Combine that with a nice distribution, and you’re getting paid to wait.
What have you been selling or trimming?
We’ve been trimming cash after holding up to 20 to 30 per cent in some accounts in 2022. We had a lot of cash instead of fixed income as interest rates were rising. Now that we believe interest rates have peaked, we’re back to our asset allocation of 70 per cent equities, 25 per cent fixed income and 5 per cent cash. The bonus is that fixed income is paying so well. It’s not like two years ago when cash and fixed income paid 1 or 1.5 per cent. Today, you can earn around 5 or 6 per cent.
Name a stock you wished you owned or didn’t sell.
Our two greatest picks were buying Lululemon Athletica Inc. LULU-Q for around $5 a share in 2008 and Shopify for less than $40 a share in 2016. Both stocks have also had splits. We still own both companies, but we cut back along the way after they tripled and quadrupled. I wished we had never sold a dollar of those two stocks over the years.
What advice do you have for new investors?
Good investing is about experience. You should try to do as many things correctly as possible and try to avoid mistakes. You will inevitably make them, but just make sure you learn from them – and keep learning. Also, be humble. Investing is a long-term process.
This interview has been edited and condensed.
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