FedEx, CVS Health and Cisco Systems: What do these three stocks have in common? Theyare value equities whose appeal hasbeen heightened by the coronaviruspandemic. Also, they’re among top stockpicker John Buckingham’s favorite playsfor 2021.
With value stocks coming into vogueagain, value investor and perma-bullBuckingham, principal and portfolio manager of wealth managementfirm Kovitz, and longtime editor ofThe Prudent Speculator newsletter,appears more optimistic about themarket than usual.
Buckingham, who has managedinvestments for more than 30 years,has been manager of the Al Frank Fundsince its inception in 1998. Through Dec.31, 2020, it has posted an annualizedreturn of 10.16% versus the S&P 500’s8.06% and versus the Russell 3000 ValueIndex’s return of 7.26%.
He spoke to Investment Advisorfrom his Laguna Beach, Californiahome, on Jan. 14, with email exchanges following. Here are highlights ofour conversations:
What’s one unloved value stock you’re
invested in that recently went up?
John Buckingham: Over the years, we’vedone extraordinarily well with RoyalCaribbean Cruise Lines. Obviously, it’snot as high as it was pre-pandemic. Butit was at a low of $20, and now it’s inthe $70s. This is a lesson to investorswho said, “I’m not going to invest inthe cruise-line space because nobody isgoing to cruise again.”
Please discuss your investing strategy.We’re value investors — trying to buythings that nobody else likes; then,when people fall in love with them,we [sell] those stocks at much higherprices. If CNBC is saying the market’sin turmoil and Jim Cramer tells you theworld is ending, that’s when you wantto mortgage everything and buy [valuestocks] because you’ll go against whatthe masses are doing.
Is the market undergoing a rotation to
It started last July. In 2020, a lot ofmoney piled into growth stocks; nowwe’re seeing a reversal of that, as wellas some money coming out of bonds.There’s also a ton of money still sittingon the sidelines that’s looking for a home.
The rotation started last July. In
2020, a lot of money piled into growth
stocks; now we’re seeing a reversal of
that, as well as some money coming out
of bonds. There’s also a ton of money
still sitting on the sidelines that’s look-
ing for a home.
The COVID- 19 vaccine is the primarycatalyst [for the rotation] because theeconomy will be doing better as we all,hopefully, get vaccinated and the pandemic starts to fade.
[Value equities] still really attractivelypriced relative to growth stocks.
Because of the GameStop short-
squeeze hysteria, the market saw sharp
sell-offs in early February. How did that
affect your forecast?
Nothing in my optimistic outlook forthe long-term prospects of our broadly diversified portfolio of undervaluedstocks has changed as a result of thatvolatility. Volatility is the friend of long-term value buyers, and it can affordopportunities to take profits when
By Jane Wollman Rusoff
Why Ace Stock Picker John Buckingham
Sees Value Shares Having a Good 2021
The longtime value investor discusses some of his stock picks for the year
and why he’s become optimistic.