Jamie Murray regrets selling stock in Costco.The Globe and Mail
While many portfolio managers are holding more cash right now, waiting for the markets to stabilize, Jamie Murray is all in.
“We’re typically fully invested, and that’s how we’ve been through this period,” says Mr. Murray, a Winnipeg-based portfolio manager and head of research at Murray Wealth Group, who manages about $215-million in assets.
Mr. Murray, who heads the company’s Global Equity Growth Fund, also hasn’t shied away from stocks in some of the hardest-hit sectors such as technology and consumer discretionary. Instead, Mr. Murray is sticking to his long-term investment approach.
“We’re still confident in the companies that we own and think that they’re maybe being a little bit unfairly punished” in the recent market rout, Mr. Murray says. “We’ve held some of these companies for years before this and will likely continue to hold them for years after this.”
Some of the fund’s top holdings today include technology names such as Google parent Alphabet Inc. GOOGL-Q, Amazon.com Inc. AMZN-Q and Microsoft Corp. MSFT-Q, as well as Canadian retailer Aritzia Inc. ATZ-T and auto parts maker Linamar Corp. LNR-T
The Global Equity Growth Fund has dropped 4.7 per cent over the past year as of May 31. That compares with an increase of 2.1 per cent for its benchmark, which comprises 75 per cent of the MSCI World Index and 25 per cent of the S&P/TSX Composite Index. The company says the fund’s five-year return was 11.8 per cent versus 9.5 per cent for its benchmark as of May 31. (All performance data include total returns.)
The Globe and Mail recently spoke to Mr. Murray about what he’s been buying and selling, and his take on a possible recession.
Describe your investing style.
We’re growth investors. We look for companies that can grow revenue and earnings over the long term. When we see these types of volatile markets, we’re not rushing out to aggressively reposition our portfolio. That said, we’re always making minor adjustments. We believe that the companies we own can endure through different markets. And ultimately, when you get these tougher economic conditions, the stronger companies come out the other side stronger.
What’s your take on a pending recession?
It’s a possibility, but I am not in the camp that believes it’s inevitable. While there are many arguments for why inflation will remain high and rising rates could lead to a recession, we’re starting to see more reasons why inflation could be significantly reduced in the next nine to 12 months. A lot of supply-driven shortages are going away. It really depends on what happens with oil prices. I think it would take higher oil prices and higher interest rates to push us into a recession.
What stocks have you been buying or adding recently?
One name we recently added to our Global Equity Growth Fund is BP. The company has a relatively attractive valuation. The cash flow it’s generating at current oil prices is particularly attractive. We also like how it’s diversified into different markets, such as LNG and fuel retail. There is a risk to being in one commodity, as we’ve seen with falling natural gas prices in the last couple of weeks. BP BP-N has had some operational issues over the years, including having to close off its Russian operations. Still, we think a lot of that’s been built into the stock price and that the company will outperform as energy markets stay strong.
Another name we’ve been adding is Linamar. The auto parts companies have been struggling with the chip shortages, but it looks like that issue could be easing in the coming months. Auto inventories are extremely low, so even if there is a consumer spending pullback, inventory at the dealerships will need replenishment. Linamar has also done a nice job pivoting toward the growing electric vehicle markets.
We’ve also added to our holdings in women’s fashion retailer Aritzia. It has a healthy balance sheet, no debt and has been aggressively buying back stock. It also appears to be seeing a lot of sales momentum, including with its expansion in the U.S., which is where a lot of the future growth will come from. It’s a very well-run company.
What have you been selling or trimming?
One name we sold recently is discount retailer Dollar Tree Inc. DLTR-Q, given the inflation headwinds. The stock was up by about 70 per cent in the past nine months, so we decided to sell and rotate back into other names.
We’ve also been trimming our position in UnitedHealth Group, a big health insurance company in the U.S. It’s a fantastic company, and one that we’ve held for three or four years now, but we didn’t see much upside in the near term. We still own a little bit of it.
Name a stock you wished you owned or didn’t sell.
One stock we regret selling is Costco COST-Q. It’s a very well-run company with a unique strategy in retail. It has also been an expensive stock on a price-to-earnings basis, which is why we sold it in 2019. In hindsight, we should have hung on to it, given how much it has increased since then. In the long term, the difference between a 32 P/E and a 26 P/E probably isn’t going to make a difference in the outcome of investing in a company if you think it will grow at a fast rate. We are considering buying it back, especially now that it has sold off in recent weeks.
What investing advice do you give friends and family when they ask?
You have to know what you own and why, and be comfortable with it. Try to avoid acting on one-liner investing tips like ‘never sell your winners’ or ‘always sell your losers.’ They may be right in certain types of markets but not others. There’s no generalization that you can use to invest. It comes down to your financial goals and how investing can help you achieve them.
This interview has been edited and condensed.
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