After a rocky start to May, the S&P 500 has recovered well. Additionally, the FTSE 100 continues to climb toward pre-COVID heights. So with the market in relative health, where are the Big Banks and Big Stock Gurus saying we should invest?
Catherine Wood (ARK)
Catherine Wood of ARK (Active Research Knowledge) has developed an almost mythical reputation for her company’s exceptional returns.
Instead of focusing on sectors, her company looks for “disruptive innovations” technologies to find new winners. While she hasn’t shared exact stocks, chief among these five disciplines are where she looks for market-beating returns:
● Artificial intelligence
● DNA sequencing
● Blockchain technology
● Energy storage
Donald Yacktman (AMG Yacktman Fund)
Yacktman is a well-known value investor who takes the “forward rate of return” into account as his most prominent buy signal. Here are his three US-based equities that could be great picks for value investors are:
● Logitech International SA
● Markel Corp
● Arch Capital Group Ltd
Bill Nygren (Oakmark Fund manager)
Nygren has an eye for growing companies that have management that is sympathetic to shareholders.
His opinion on the market is that things will be very much like the old normal when we finally get back to the new normal.
His four big picks of late were:
● Diamondback Energy Inc.
● Fiserv Inc.
● KKR& Co. Inc.
● Concho Resources Inc.
Three Billionaires, Three Opinions
John Paulson, famous for making $20 billion bettings against the global financial crisis in 2008, has released ten stock picks, which you can read here.
His no.1 pick was Horizon Therapeutics, a biopharmaceutical company.
While fellow billionaire David Abrams, whose big play is buying undervalued stocks and holding them for years, has Lithia Motors, Inc. as number 1 in his top 10 stock picks.
Steven Cohen, the owner of Point72 Asset Management, has a strategy that posted a 16% gain in his main hedge fund in 2020. His three stock tips are:
● Array Technologies (ARRY)
● Paya Holdings (PAYA)
● Dicerna Pharma (DRNA)
Green-tech, digital payment processing, and pharma are all solid future sectors. For Cohen, these three could be the best amongst them.
Not All Gurus Lead to Gold
Of course, it needs to be made clear that you should view many stock gurus with skepticism. There are many financial tip scams on the web where “gurus” seek payment for tips that aren’t based on much skill at all.
Also, while there is a boisterous feeling in this bull market, plenty of cautionary voices feel that the market is way overvalued and is likely to fall or even crash shortly. Jeremy Grantham of GMO has called the market a ‘legendary bubble.’
And lastly, not all gurus perform well with stock picks. Many do, and they stick around for a bit, but some get lucky and outstay their welcome, dragging others’ money down with them.
Always research on your own if possible.
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Alpesh Patel OBE