In this edition of Analyst Insights, Derek Derman frames the impact of the COVID-19 pandemic on the Financial Services sector, highlights how banks and insurance companies are much stronger now than during the financial crisis, and discusses some of his highest conviction investment ideas.
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The global spread of the Coronavirus (COVID-19) is creating panic in financial markets. We appear to be in a period of maximum uncertainty characterized by a rapidly expanding list of questions, but few, if any, answers. Over the coming weeks, it seems likely that patient counts may dramatically increase in the U.S. and create some short-term pressure on economic activity. As patient counts rise, the American media will predictably stoke public fears of an intractable pandemic. Contrary to these fears, we see encouraging reasons to believe that an effective therapy could be approved within the next few months. We also believe the fatality rate in the U.S. could be much lower than in China, where smoking is more prevalent.
In this edition of Analyst Insights, Akash Ghiya explains the pillars of our investment thesis in the Energy sector, reviews the sector’s 10-year history, and discusses the key issues on investors’ minds in 2019.
We believe the market has set up a rare opportunity for value investing. The valuation gap between growth and value stocks is at historically high levels, similar to that last observed during the dot-com bubble of 1999-2000. For investors who've benefited from the strong rally in growth stocks, history suggests it may be prudent to reallocate profits toward value stocks, where valuations are much more reasonable and future returns are potentially more favorable.
Bottom-up Investing After Macroeconomic Anomalies
With valuation as our north star, we apply the same, bottom-up investment process across all sectors of the economy, regardless of their macroeconomic sensitivity.