1 00:00:01,040 --> 00:00:04,040 Speaker 1: You're listening to Taking Stock with Kathleen Hayes and Pim 2 00:00:04,120 --> 00:00:09,720 Speaker 1: Fox on Bloomberg Radio. Volatility markets around the world that 3 00:00:09,760 --> 00:00:13,920 Speaker 1: are watching central banks very closely reacting to headlines on 4 00:00:14,040 --> 00:00:18,160 Speaker 1: oil so much creating volatility again as summer turns into 5 00:00:18,200 --> 00:00:20,760 Speaker 1: autumn this year, what's an investor to do at a 6 00:00:20,760 --> 00:00:23,480 Speaker 1: time like this? We're going to ask Gregg Woodard today, 7 00:00:23,560 --> 00:00:27,360 Speaker 1: senior analyst at Manning and appeared joining us in our 8 00:00:27,400 --> 00:00:30,000 Speaker 1: New York studio today. Welcome to the show. Thank you 9 00:00:30,040 --> 00:00:32,720 Speaker 1: for having me. So, how does the how do you 10 00:00:32,760 --> 00:00:36,960 Speaker 1: describe right now? You know, the environment for stocks? Is it? 11 00:00:37,200 --> 00:00:39,839 Speaker 1: You know, slow growth, but there's lots of opportunity? Is it? 12 00:00:39,880 --> 00:00:41,720 Speaker 1: What growth isn't so bad? But you have to look 13 00:00:41,720 --> 00:00:44,000 Speaker 1: around the world. What's the Gregg Wodard view of the 14 00:00:44,000 --> 00:00:47,400 Speaker 1: equity markets? We say a very challenging growth environment. You 15 00:00:47,440 --> 00:00:51,639 Speaker 1: combine that with valuations in the equity market um at 16 00:00:51,640 --> 00:00:53,479 Speaker 1: a point that that we think are really priced for 17 00:00:53,560 --> 00:00:56,920 Speaker 1: mediocre returns. So there's nothing to suggest a downturn or 18 00:00:56,920 --> 00:01:00,000 Speaker 1: a bear market. But we just think it's becoming more 19 00:01:00,080 --> 00:01:03,480 Speaker 1: difficult to find kind of businesses and stocks and companies 20 00:01:03,480 --> 00:01:06,920 Speaker 1: that are going to achieve long term investment goals. Having 21 00:01:06,959 --> 00:01:10,319 Speaker 1: said that, Greg, do you believe that when you have 22 00:01:10,520 --> 00:01:15,760 Speaker 1: this slow growth environment you describe that people's reaction to 23 00:01:16,000 --> 00:01:20,320 Speaker 1: negative news is different than if it was a more 24 00:01:20,400 --> 00:01:24,240 Speaker 1: robust economy that we were experiencing. Absolutely, And if you 25 00:01:24,280 --> 00:01:26,800 Speaker 1: look at the nature kind of a volatility, I think 26 00:01:26,840 --> 00:01:28,800 Speaker 1: that that reflects that. I mean, if you if you 27 00:01:28,800 --> 00:01:31,160 Speaker 1: look at typical measures and VIX, it's been a pretty 28 00:01:31,160 --> 00:01:34,360 Speaker 1: complacent market up until the last couple of days. Um, 29 00:01:34,400 --> 00:01:36,640 Speaker 1: But as you mentioned, you know, you combine that slow 30 00:01:36,640 --> 00:01:39,000 Speaker 1: growth and look where we are today. We've leveled off 31 00:01:39,040 --> 00:01:40,959 Speaker 1: and we've improved over the last couple of years, but 32 00:01:41,000 --> 00:01:43,880 Speaker 1: we've leveled off two really levels of growth that we've 33 00:01:43,880 --> 00:01:47,280 Speaker 1: seen at prior recessionary level. So when you get some 34 00:01:47,319 --> 00:01:50,000 Speaker 1: type of exogenous shock, whether it be Brexit or whereas 35 00:01:50,040 --> 00:01:52,880 Speaker 1: of China last year, the talk doesn't turn to is 36 00:01:52,880 --> 00:01:54,520 Speaker 1: it can impact growth? It turns to are we going 37 00:01:54,560 --> 00:01:56,400 Speaker 1: to have a recession? Are we going to have a 38 00:01:56,440 --> 00:01:58,960 Speaker 1: bear market? So I think you get these overreactions and 39 00:01:59,000 --> 00:02:02,720 Speaker 1: you get these bouts of latility and active FLEXI managers 40 00:02:02,720 --> 00:02:04,880 Speaker 1: can use that not to market time, but to be 41 00:02:04,960 --> 00:02:07,360 Speaker 1: able to pick up good companies at good prices and 42 00:02:07,440 --> 00:02:10,480 Speaker 1: be patient and waiting for some of that volatility. Uh, 43 00:02:10,720 --> 00:02:12,520 Speaker 1: I just want and let's flesh out again this is 44 00:02:12,560 --> 00:02:15,720 Speaker 1: basic picture a little bit more because you said, Okay, 45 00:02:15,720 --> 00:02:18,919 Speaker 1: we've got low growth and it's just hard to find opportunities. 46 00:02:19,680 --> 00:02:23,200 Speaker 1: Uh is it? Is it a low growth obstacle from 47 00:02:23,280 --> 00:02:26,360 Speaker 1: the macro standpoint? You just look out across a the 48 00:02:26,440 --> 00:02:31,480 Speaker 1: U S economy, consumers are spending moderately sometimes well sometimes 49 00:02:31,560 --> 00:02:34,200 Speaker 1: less business business investments week. You can run through all 50 00:02:34,200 --> 00:02:38,880 Speaker 1: the things. Or is it more the companies themselves not 51 00:02:39,000 --> 00:02:41,359 Speaker 1: doing what it takes, not having any exciting products or 52 00:02:41,400 --> 00:02:44,240 Speaker 1: services that kind of create the growth. Ye, well, I 53 00:02:44,280 --> 00:02:47,160 Speaker 1: think it's it's more the former, because there's certainly pockets 54 00:02:47,160 --> 00:02:49,160 Speaker 1: of opportunity out there. I mean, you look at some 55 00:02:49,200 --> 00:02:51,400 Speaker 1: of the great technology companies here in the US. You 56 00:02:51,480 --> 00:02:54,640 Speaker 1: look at some, for example, opportunities within the healthcare space. 57 00:02:54,639 --> 00:02:57,360 Speaker 1: So I I think there's companies with great business models 58 00:02:57,400 --> 00:03:00,840 Speaker 1: with you know, for example, trends of of of moves 59 00:03:00,880 --> 00:03:04,600 Speaker 1: of businesses and consumers to the online marketplace. So if 60 00:03:04,639 --> 00:03:06,920 Speaker 1: you can find these companies that can benefit from some 61 00:03:07,000 --> 00:03:09,519 Speaker 1: of these secular growth themes that aren't tightly tied to 62 00:03:09,560 --> 00:03:12,919 Speaker 1: the economy. We think there are plenty of opportunities. Let's 63 00:03:12,919 --> 00:03:16,040 Speaker 1: talk about one of them, in particular, cloud computing. And 64 00:03:16,080 --> 00:03:19,240 Speaker 1: we speak a lot about Salesforce dot Com. We've had 65 00:03:19,480 --> 00:03:22,639 Speaker 1: Mark benning Off, the chief executive of Salesforce dot Com, 66 00:03:22,720 --> 00:03:25,959 Speaker 1: recently on a Bloomberg Amazon, of course is a well 67 00:03:26,000 --> 00:03:29,880 Speaker 1: known name. But you mentioned service Now as a company. 68 00:03:30,080 --> 00:03:32,960 Speaker 1: How did you find service Now and maybe just tell 69 00:03:33,040 --> 00:03:34,760 Speaker 1: us a little bit about your thinking about how that 70 00:03:34,880 --> 00:03:37,360 Speaker 1: came to be part of the portfolio. Certainly, I think 71 00:03:37,400 --> 00:03:40,880 Speaker 1: they they are a bit under the radar screen, let's say, 72 00:03:40,880 --> 00:03:43,560 Speaker 1: relative to a Salesforce dot Com, But this is a 73 00:03:43,560 --> 00:03:46,320 Speaker 1: company that that we think has a lot of recurring revenue, 74 00:03:46,320 --> 00:03:49,720 Speaker 1: has a subscription revenue model, and has been transitioning towards that. 75 00:03:49,880 --> 00:03:52,520 Speaker 1: So that's given us a little bit of an opportunity, 76 00:03:53,040 --> 00:03:55,440 Speaker 1: uh in terms of evaluation. And look, let's be clear, 77 00:03:55,480 --> 00:03:58,480 Speaker 1: there's not a lot of really good growth companies that 78 00:03:58,480 --> 00:04:01,480 Speaker 1: you're going to find at extremely extremely cheap prices. So 79 00:04:02,000 --> 00:04:04,960 Speaker 1: UM we certainly won't argue that any company within the 80 00:04:05,000 --> 00:04:09,240 Speaker 1: space UM is incredibly cheap, but we think if you 81 00:04:09,240 --> 00:04:13,400 Speaker 1: can find these companies against secular growth uh More movement 82 00:04:13,480 --> 00:04:16,800 Speaker 1: to cloud computing, a company like Service now makes makes 83 00:04:16,839 --> 00:04:19,920 Speaker 1: for an interesting investment. Well, and how about you know 84 00:04:20,160 --> 00:04:23,520 Speaker 1: some of them favorites. You know, you got Google, you 85 00:04:23,600 --> 00:04:26,400 Speaker 1: got Facebook, you got Amazon, even got price Line. But 86 00:04:26,520 --> 00:04:30,400 Speaker 1: are these at least become like sort of the steady 87 00:04:30,480 --> 00:04:32,520 Speaker 1: you can eat something out kind of a stock as 88 00:04:32,520 --> 00:04:34,880 Speaker 1: opposed to woo jump on board and go for that 89 00:04:34,920 --> 00:04:37,400 Speaker 1: wild ride. But again, if there's not that much growth, 90 00:04:37,440 --> 00:04:39,599 Speaker 1: I guess you should be happy even to eke out 91 00:04:39,640 --> 00:04:42,760 Speaker 1: just some steady, modest growth and reliable names like that? 92 00:04:42,880 --> 00:04:45,000 Speaker 1: Is that it? I think that's exactly right. And in 93 00:04:45,040 --> 00:04:47,320 Speaker 1: the four names you mentioned we would view as kind 94 00:04:47,360 --> 00:04:50,560 Speaker 1: of core holdings, Um, we've hold we've held all four 95 00:04:50,600 --> 00:04:53,479 Speaker 1: of those for some time now, and then we will 96 00:04:53,520 --> 00:04:56,479 Speaker 1: manage the position around valuation. So you know, a great 97 00:04:56,520 --> 00:05:00,000 Speaker 1: example during Brexit, there was a lot of concern about Europe. Uh, 98 00:05:00,040 --> 00:05:02,839 Speaker 1: price Line has a lot of exposure, um, you know 99 00:05:02,880 --> 00:05:06,359 Speaker 1: within the European hotel space. So um, there's an example 100 00:05:06,360 --> 00:05:08,320 Speaker 1: of where you get a pull back in a great company. 101 00:05:08,360 --> 00:05:09,760 Speaker 1: There's a price that you want to own a little 102 00:05:09,800 --> 00:05:11,600 Speaker 1: bit more of it, and you can manage that position 103 00:05:11,640 --> 00:05:13,760 Speaker 1: and add to it. So that's really how we view 104 00:05:14,000 --> 00:05:18,559 Speaker 1: kind of those core positions. The disposition of the SMP 105 00:05:18,720 --> 00:05:22,640 Speaker 1: five in terms of industry groups UH is changing and 106 00:05:22,720 --> 00:05:24,960 Speaker 1: instead of just being ten, there are going to be 107 00:05:24,960 --> 00:05:28,280 Speaker 1: eleven industry groups. And Dave Wilson are stocks Commist has 108 00:05:28,279 --> 00:05:31,880 Speaker 1: noted this previously, but they're reclassifying real estate. It's going 109 00:05:31,920 --> 00:05:35,480 Speaker 1: to be its own sector. Talk about how that may 110 00:05:35,640 --> 00:05:39,240 Speaker 1: offer opportunity. Sure, I think, you know the world is 111 00:05:39,320 --> 00:05:41,559 Speaker 1: looking for yield, and it's kind of interesting. Fixed income 112 00:05:41,600 --> 00:05:44,600 Speaker 1: investors are relying on capital appreciation for yield. They're buying 113 00:05:44,600 --> 00:05:48,320 Speaker 1: at zero and sometimes below zero interest rates. Equity investors 114 00:05:48,320 --> 00:05:51,040 Speaker 1: are are seeking out kind of income. So it's kind 115 00:05:51,040 --> 00:05:53,279 Speaker 1: of a you know, the world is on its on 116 00:05:53,360 --> 00:05:55,839 Speaker 1: its head, so um, you know, but I think that 117 00:05:55,920 --> 00:05:58,440 Speaker 1: does provide some opportunities. And it's interesting they're breaking out 118 00:05:58,440 --> 00:06:02,320 Speaker 1: the resector from financials. Reats historically have provided a good 119 00:06:02,320 --> 00:06:06,760 Speaker 1: inflation hedge for investors UM, and it's interesting, UM, if 120 00:06:06,839 --> 00:06:10,600 Speaker 1: you're kind of active and selective within that space, UM, 121 00:06:10,839 --> 00:06:13,320 Speaker 1: I think there'll be more of an effect on the 122 00:06:13,320 --> 00:06:16,680 Speaker 1: mid and small cap names within that space UM in 123 00:06:16,760 --> 00:06:20,320 Speaker 1: terms of asset flows going into that area. And I 124 00:06:20,360 --> 00:06:23,160 Speaker 1: think to be an active kind of flexible manager. Um, 125 00:06:23,200 --> 00:06:25,360 Speaker 1: you can really add some value in that space. Interesting 126 00:06:25,440 --> 00:06:28,359 Speaker 1: that there retail is one area that you like on 127 00:06:28,360 --> 00:06:33,000 Speaker 1: a very selective basis. Interesting because we're overstored, We've got 128 00:06:33,000 --> 00:06:35,560 Speaker 1: weak retails sales today. I mean, so many people are 129 00:06:35,640 --> 00:06:38,279 Speaker 1: just its department stores. It's just a tough time to 130 00:06:38,320 --> 00:06:40,320 Speaker 1: be a retailer. So who do you look for in 131 00:06:40,360 --> 00:06:42,360 Speaker 1: a space like that? So that goes back to that 132 00:06:42,360 --> 00:06:44,640 Speaker 1: that concept of slow growth. I mean, we think of 133 00:06:44,680 --> 00:06:47,440 Speaker 1: the retail world as a fixed pie, and we want 134 00:06:47,480 --> 00:06:50,560 Speaker 1: to own the companies who can who can gain a 135 00:06:50,640 --> 00:06:53,720 Speaker 1: greater piece of that stagnant pie. So you look at 136 00:06:53,760 --> 00:06:57,440 Speaker 1: an Amazon, Um, you know, they're a terrific example of 137 00:06:57,480 --> 00:06:59,960 Speaker 1: a company that is able to take market share kind 138 00:07:00,120 --> 00:07:03,400 Speaker 1: from traditional retailers. Um. You know, the e commerce are 139 00:07:03,440 --> 00:07:05,719 Speaker 1: certainly growing as a percentage of total retail, and then 140 00:07:05,760 --> 00:07:07,839 Speaker 1: they're taking market share within e commerce, so they have 141 00:07:07,880 --> 00:07:10,120 Speaker 1: a lot of ways to win. And I think that's 142 00:07:10,120 --> 00:07:12,960 Speaker 1: how you have to approach the traditional retail market. How 143 00:07:12,960 --> 00:07:15,840 Speaker 1: do you approach the market having to do with healthcare? 144 00:07:16,000 --> 00:07:18,000 Speaker 1: I was noting earlier in the week we got some 145 00:07:18,080 --> 00:07:21,360 Speaker 1: news out of the chief financial officer of McKesson, the 146 00:07:21,400 --> 00:07:27,360 Speaker 1: pharmacy benefits management firm, saying that you're gonna see very 147 00:07:27,480 --> 00:07:30,640 Speaker 1: muted price increases at least until perhaps, let's say, after 148 00:07:30,680 --> 00:07:34,200 Speaker 1: the election cycle. Because the media attention political attention on 149 00:07:34,440 --> 00:07:37,320 Speaker 1: price increases for a drugs, A lot of the stocks 150 00:07:37,360 --> 00:07:40,960 Speaker 1: took a tumble, including express Scripts, and the stock is 151 00:07:40,960 --> 00:07:44,520 Speaker 1: down like twenty so far this year. Is that the 152 00:07:44,640 --> 00:07:48,080 Speaker 1: kind of opportunity that you're saying an active manager can 153 00:07:48,160 --> 00:07:50,480 Speaker 1: get involved with. Absolutely, And I think it goes back 154 00:07:50,480 --> 00:07:52,360 Speaker 1: to some of the themes that I had mentioned earlier, 155 00:07:52,360 --> 00:07:54,400 Speaker 1: where you're looking for themes that aren't tied to kind 156 00:07:54,400 --> 00:07:57,600 Speaker 1: of economic growth or less tightly tied to economic growth. 157 00:07:57,640 --> 00:08:00,320 Speaker 1: So UM, rather than make an investment bay based on 158 00:08:00,440 --> 00:08:03,360 Speaker 1: who's gonna somebody's gonna win in November, we know that 159 00:08:03,680 --> 00:08:05,240 Speaker 1: not a lot of people like it, but they but 160 00:08:05,320 --> 00:08:07,560 Speaker 1: we know that UM, so we want to make an 161 00:08:07,600 --> 00:08:11,480 Speaker 1: investment into themes that are persistent and and will occur 162 00:08:11,600 --> 00:08:15,200 Speaker 1: irrespective of what happens in November. And think about some 163 00:08:15,280 --> 00:08:18,160 Speaker 1: themes and healthcare related to cost containment, and we think 164 00:08:18,160 --> 00:08:21,600 Speaker 1: a company like express Scripts UM is very well aligned 165 00:08:21,640 --> 00:08:26,600 Speaker 1: with planned sponsors, with employers, UM, with providers, to really 166 00:08:26,640 --> 00:08:30,320 Speaker 1: help squeeze costs out of the overall healthcare system. And 167 00:08:30,400 --> 00:08:34,040 Speaker 1: that theme is going to be persistent next year, the 168 00:08:34,120 --> 00:08:36,680 Speaker 1: year after UM and I think, you know, some of 169 00:08:36,679 --> 00:08:39,880 Speaker 1: the uncertainty caused by the election can be a benefit 170 00:08:40,000 --> 00:08:42,040 Speaker 1: or can be an opportunity to step into a name 171 00:08:42,120 --> 00:08:45,280 Speaker 1: like that. You know, AMC Networks under a bit of 172 00:08:45,280 --> 00:08:47,880 Speaker 1: pressure today there was a downgrade and people are looking 173 00:08:47,920 --> 00:08:51,080 Speaker 1: at some of their new show line ups and ad sales, etcetera, 174 00:08:51,040 --> 00:08:54,200 Speaker 1: etceter More broadly, when you look at companies UM in 175 00:08:54,240 --> 00:08:56,679 Speaker 1: the media world, UM there are you definitely have some 176 00:08:56,760 --> 00:08:59,480 Speaker 1: names you like. Why we liked some of the larger 177 00:08:59,520 --> 00:09:02,080 Speaker 1: diversity by names like like a Time Warner, like a 178 00:09:02,160 --> 00:09:06,680 Speaker 1: Fox UM that had diversified revenue bases and they have 179 00:09:06,800 --> 00:09:10,000 Speaker 1: a lot of their revenue derived from content. So this 180 00:09:10,000 --> 00:09:13,720 Speaker 1: tends to be recurring in nature. UM content. We think, look, 181 00:09:13,720 --> 00:09:16,160 Speaker 1: there's a war going on in terms of where you're 182 00:09:16,200 --> 00:09:19,240 Speaker 1: going to consume this, whether it's online, whether it's on TV. 183 00:09:19,679 --> 00:09:21,720 Speaker 1: Were agnostic to that. We want to own the companies 184 00:09:21,720 --> 00:09:24,520 Speaker 1: who will provide that content and provide in a recurring manner. 185 00:09:24,600 --> 00:09:26,920 Speaker 1: So that's why we like those types of companies. I 186 00:09:27,000 --> 00:09:29,640 Speaker 1: can't let you go without getting your thoughts on Apple 187 00:09:29,960 --> 00:09:32,280 Speaker 1: and what you've been hearing. Are you surprised by the 188 00:09:32,360 --> 00:09:35,640 Speaker 1: increase in Apple related to the release of the new 189 00:09:35,679 --> 00:09:39,720 Speaker 1: iPhones seven, Well, you always get volatility and noise. I 190 00:09:39,720 --> 00:09:42,000 Speaker 1: think around that, we try to step back and focus 191 00:09:42,040 --> 00:09:43,800 Speaker 1: long term, and the thing that we're focused on with 192 00:09:43,840 --> 00:09:47,360 Speaker 1: Apple is they're just continuing to increase their installed base. 193 00:09:47,400 --> 00:09:49,280 Speaker 1: So everyone looks at how many do they sell this quarter? 194 00:09:49,440 --> 00:09:52,360 Speaker 1: Next quarter, we look more at what is the installed base, 195 00:09:52,559 --> 00:09:55,679 Speaker 1: whether you're looking at particularly iPhones, but UM and that 196 00:09:55,760 --> 00:09:58,280 Speaker 1: turns into a service model and then they're able to 197 00:09:58,320 --> 00:10:00,320 Speaker 1: sell into that in the future. So we think that 198 00:10:00,360 --> 00:10:03,160 Speaker 1: they're moving UM to a company that's going to be 199 00:10:03,240 --> 00:10:06,480 Speaker 1: much more recurring in in nature, and you can buy 200 00:10:06,520 --> 00:10:08,320 Speaker 1: it at a very decent price. I want to thank 201 00:10:08,320 --> 00:10:10,680 Speaker 1: you very much for spending time with this, grego Is 202 00:10:10,679 --> 00:10:15,400 Speaker 1: said Greg Woodward is senior analyst Manning and Napier and 203 00:10:15,480 --> 00:10:17,839 Speaker 1: shares of Apple up three and a half percent. We 204 00:10:17,960 --> 00:10:19,480 Speaker 1: take you through it's the close next