Value investor shares 8 stocks set to rally on the economic reopening

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A value investor whose fund has beaten 95% of peers over the past year shares 8 stocks set to rally on the economic reopening — and breaks down how her team shifted their portfolio to capture unique post-pandemic opportunities

The $5.9 billion value fund has struggled over the past few years in an ultra-low-interest-rate environment where long-duration, high-growth tech stocks have dominated the markets.

However, since the first positive vaccine announcement in November last year, value and cyclical stocksas investors move to capitalize on the historic economic recovery and reopening. The return of value is also reflected in the performance of the Causeway International Value fund, which has beaten 95% of its category peers to generate an 80.61% annualized trailing one-year return, according toLee said the Causeway team was quick to shift its portfolios amid the rapid developments during the different stages of the pandemic. In the short term, banks did not appear to be the best bet.

However, the differentiating factor is that this is not a financial crisis but rather a healthcare crisis that brought a lot of economic activities to a halt. Banks were not engaged in aggressive lending activities the way they were during the 2008 financial crisis. "So we had high convictions that looking at face valuation, it was discounting something worse than a global financial crisis," Lee said."Analyzing banks from a bottom-up basis, we recognize that base financials were in a much healthier position, and they had not taken credit risk to the same degree."undervalued opportunities"We like those exposures because we see the amount of pessimism that is reflected in the share price as short-term," she said.

 

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