Latest / Bloomberg Intelligence / Point View's Dietze Likes: Financials, Energy, Lat Am (Audio)

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Point View's Dietze Likes: Financials, Energy, Lat Am (Audio) · Bloomberg Intelligence

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  Speaker 1: I'm Charlie Pelota. Another move law for US equities. We've
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  Speaker 1: six dollars. And see, I'm Charlie Pellett, and that's of
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  Speaker 1: Bloomberg Business Flash. This is taking stuff with Dathlee Hayes
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  Speaker 1: and Grim Box on Bloomberg Radio. Hi'm Alex Brinka and
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  Speaker 1: for Kathleen Hayes today. Um, and now we are looking
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  Speaker 1: for great investment opportunities. Here with a few from his
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  Speaker 1: book of tricks is David Deet's founder, President and chief
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  Speaker 1: investment Strategies at Point View Wealth Management, who helps oversee
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  Speaker 1: about two hundred and fifty million dollars from Summit New Jersey. David,
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  Speaker 1: where are you finding opportunities these days? Well, we're looking
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  Speaker 1: at areas which are out of favor, have not performed well.
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  Speaker 1: The evaluations look attractive, and really there's some reason for
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  Speaker 1: a callus for better opportunities ahead. The first one I
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  Speaker 1: would highlight is financial services. Um, there's no bubble there,
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  Speaker 1: despite the other marketing industries near record highs. In fact,
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  Speaker 1: this is the one group that has never really recovered.
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  Speaker 1: And why are they being held back? The first one,
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  Speaker 1: of course, the first reasons is the low interest rates
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  Speaker 1: is keeping a lid on their pricing on their loans.
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  Speaker 1: And certainly by two by Friday at this time, we'll
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  Speaker 1: know a little bit more about perhaps the trajectory of
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  Speaker 1: interest rates. Most people think industrates are going up eventually,
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  Speaker 1: this may be a great opportunity to take positions in
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  Speaker 1: financial services stocks, particularly banks, to take advantage of potentially
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  Speaker 1: high strates going forward. Thanks, are we talking US firms? Yeah,
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  Speaker 1: we're We're we're us focused here. Um, we think there's
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  Speaker 1: playing opportunities on this side of the pond. One we
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  Speaker 1: would site is Bank of America. Bank of America has
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  Speaker 1: one of the best franchises in this country, with a
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  Speaker 1: coast to coast network of banks uh in all fifty states. Um.
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  Speaker 1: They cover the gamut from investment banking to retail banking
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  Speaker 1: and loans and dealing with high net worth investors needs.
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  Speaker 1: Yet this is a stock to selling it just two
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  Speaker 1: thirds of tangible book values, suggesting is worth more dead
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  Speaker 1: than alive. And we think ultimately, if people see a
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  Speaker 1: path forward on interest rates, people will develop more interest
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  Speaker 1: in Banks America Aside from fundamentals, Are there other catalysts
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  Speaker 1: you are considering? What I mean? Morgan Stanley comes to
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  Speaker 1: mind with value Act getting involved. There are there other
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  Speaker 1: kind of potential upside catalysts that that play into your
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  Speaker 1: investment decisions? Yeah? Absolutely, they got The banks got off
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  Speaker 1: to a bad start this year because of concerns of
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  Speaker 1: the quality of their energy loans. But since we've seen
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  Speaker 1: energy prices advance about eight from their Fabruary low, I
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  Speaker 1: think some of the concerns there has dissipated. Second, of course,
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  Speaker 1: banks have been your traditional source of dividends, but they've
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  Speaker 1: been held back because of the need to get permission
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  Speaker 1: from regulators and past these so called stressed us. Well,
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  Speaker 1: at the beginning of the summer, all US banks pass
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  Speaker 1: the stress staff, and their plans to return capital of
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  Speaker 1: the shareholders in the form of buy backs and dividends
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  Speaker 1: were all validated by regulars. So I think you could
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  Speaker 1: easily see a situation where the banks start to pay
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  Speaker 1: back a lot more of their earnings, and that's going
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  Speaker 1: to attract investor interests. David Deeds just comparing JP Morgan Chase,
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  Speaker 1: for example, in Bank of America, the yield a dividend
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  Speaker 1: yield on Bank of America under two percent, the yield
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  Speaker 1: for JP Morgan Chasing a nearly three percent. Shares of
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  Speaker 1: Bank of America down eight and a half percent this year.
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  Speaker 1: JP Morgan Chase basically unchanged. Why would you favor one
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  Speaker 1: over the other. Well, because the book value on Bank
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  Speaker 1: of Americas is two thirds of tangible book value, while
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  Speaker 1: JP Morgan's is one point three. So I think there's
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  Speaker 1: a lot of room for ketchup. In Bank of America
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  Speaker 1: the price the earning free issues. There's somewhat similar suggesting
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  Speaker 1: that Bank America is paying out a much lower uh
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  Speaker 1: percentage of their profits in the form of dividends. Again,
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  Speaker 1: I can see ketchup. So here again investing the laggard
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  Speaker 1: for a catchup and try and outperform in that manner.
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  Speaker 1: Outside of financials wherelse are you looking? We like energy?
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  Speaker 1: Yeah we do. I mean, you know, one of the
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  Speaker 1: reasons people are fraught within decision now is you've got
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  Speaker 1: the stock market indessees knocking on all time high levels.
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  Speaker 1: But of course that's not the case in energy. Anyone
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  Speaker 1: who needs to know why, Hey, in Arizona you can
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  Speaker 1: buy gasoline at a dollar eighty one a gall at
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  Speaker 1: the pump just a couple of years ago, where we're
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  Speaker 1: about five dollars a gallon. So energy is the the
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  Speaker 1: anti bubble um And of course economics one oh one.
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  Speaker 1: So just here's what happens um second year in a
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  Speaker 1: row of a downtrend in capital expenditures, the number of
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  Speaker 1: drilling rigs has been flashed basically, UM people have been
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  Speaker 1: laid off left and right. The banks don't want to
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  Speaker 1: lens the air anymore. So production and supply is propty.
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  Speaker 1: So we think we're going to get in to a
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  Speaker 1: situation now that energy prices about half what they were,
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  Speaker 1: where that supply demand starts to stabilize and ultimately starts
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  Speaker 1: to move up. And so we're looking for first class
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  Speaker 1: energy companies to take advantage of that trend? Are we
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  Speaker 1: talking old services companies, drillers, explorers? Where do you sign
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  Speaker 1: the most opportunity? You know, I think across the board.
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  Speaker 1: One company that we're highlighting here is Baker Hughes. Baker
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  Speaker 1: Houston's at fifty two dollars to share. Now last year,
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  Speaker 1: late last year, Haliburn took our run at it. Remember Halibern,
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  Speaker 1: Baker Hughes, Slamberget, and Weatherford are the big four and
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  Speaker 1: oil services. So you had the number two and number
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  Speaker 1: three wanting to get together um to form a much
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  Speaker 1: bigger competitor to Slamberge. Haliburn offered seventy dollars to share
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  Speaker 1: for this doctors now fifty two, so you know what
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  Speaker 1: they thought was fair value. Unfortunately the deal did not
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  Speaker 1: go through for anty trust concerns. If I think it
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  Speaker 1: highlighted value, a lot of people who were in a
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  Speaker 1: short term for that merger have left. And so if
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  Speaker 1: you're an energy bowl as we are, longer term, we
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  Speaker 1: think Baker Hughes is an attractive way to play the
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  Speaker 1: improving investor cast flow into the energy space. When you
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  Speaker 1: talk about Baker Hughes, the yield there at one point
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  Speaker 1: three percent, would you consider buying one of the major
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  Speaker 1: integrated oil companies like Royal Dutch shell shares they're paying
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  Speaker 1: about seven and a half percent. Well, you know, we
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  Speaker 1: we liked the sector overall. Again, companies like Royal Dutch
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  Speaker 1: Total VP they're also under pressure because they're non domestic.
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  Speaker 1: People are very leery of European stocks. As a result,
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  Speaker 1: you're getting better dividends. So I mean, the interesting thing
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  Speaker 1: is you're getting under one percent for a ten year
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  Speaker 1: English sovereign bond in Royal Dutch, headquartered in in uh
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  Speaker 1: London is paying seven percent. What am I missing here?
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  Speaker 1: That looks like an attractive area for a portion of
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  Speaker 1: your money U S investors, But are there other opportunities
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  Speaker 1: outside of domestic equities? That you are looking. Yeah. I
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  Speaker 1: mean one area that we like is emerging markets. Of course,
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  Speaker 1: you know Latin American stocks, TENNY stocks, they had just
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  Speaker 1: went gang busters in the first decade of the century,
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  Speaker 1: but over the last six years they have slowed down dramatically,
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  Speaker 1: but the fundamentals are still intact. One is they've got
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  Speaker 1: the younger demographics, so there's much better growth potential there. Um.
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  Speaker 1: The second, of course, the valuations. We're struggling with some
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  Speaker 1: of the highest valuations we've seen the last twenty years,
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  Speaker 1: but the price earning multiples in the emerging markets is
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  Speaker 1: about ten or eleven, so they're very attractively priced. Um.
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  Speaker 1: The one area that we're particularly focused on is Latin America.
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  Speaker 1: Why is commodity based If we're right on our energy call,
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  Speaker 1: and I think that goes to other commodities like copper
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  Speaker 1: and iron ore devil buy some stability there right now.
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  Speaker 1: Of course they're under the cloud because of political turmoil.
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  Speaker 1: But what we're saying, for example, in Brazil they're impeaching
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  Speaker 1: the president. Um. Those um, you know, non free market
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  Speaker 1: forces are being pushed back a little bit, and so
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  Speaker 1: we think the valuations are attractive in some of those
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  Speaker 1: areas and can provide a place to put your money
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  Speaker 1: in this very low interest rate environment, and you're very
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  Speaker 1: fearful for the high valuations on US domestic stocks, David
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  Speaker 1: diets I was taking a look courtesy of your research
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  Speaker 1: at the Fidelity Latin America Fund. The symbol there is
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  Speaker 1: f l A t X and U to dated something
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  Speaker 1: more than thirty. Is it too expensive now? No, I
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  Speaker 1: don't think so, because since two thousand and ten is
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  Speaker 1: down thirty notwithstanding that recent gain versus about SMP. But
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  Speaker 1: just drilled down into some of the fundamentals that David
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  Speaker 1: n yield on that portfolio courtesy Warning Star is four
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  Speaker 1: point eight percent versus just two point three percent the
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  Speaker 1: SMP five hundred, and the price to earning creation that
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  Speaker 1: portfolio versus the SMPS nineteen now ad mentally more volatilely there.
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  Speaker 1: But for those fearful of the higher valuations in the
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  Speaker 1: sky high prices here, we think that if you like
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  Speaker 1: dividend yield, cheaper valuations, this is a home for a
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  Speaker 1: portion of your money. Thanks very much for spending time
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  Speaker 1: with us. David Dietz is the founder of the President
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  Speaker 1: and the chief investment strategist for Point View Wealth Management,
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  Speaker 1: helping to manage more than two hundred and fifty million dollars.
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  Speaker 1: Based in Summit, New Jersey. He's speaking about investing in
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  Speaker 1: energy stocks such as Baker, Hughes, Schlumberge, and Halliburton, as
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  Speaker 1: well as bank stocks a Bank of America, JP, Morgan, Chase,
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  Speaker 1: Wells Fargo, and he also likes Latin America with the
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  Speaker 1: Fidelity Latin America Fund f l A t X. This
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  Speaker 1: is taking stock on Bloomberg. I'm PIM Fox. I want
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  Speaker 1: to thank my co host Alex Barrinka. Thanks John, Are
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  Speaker 1: you kidding? It's wonderful to have you. Alex Barrinka of
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  Speaker 1: Bloomberg News knows everything there is to know about initial
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  Speaker 1: public offerings. We're going to take you through to the
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  Speaker 1: close on Wall Street next