David Harden is President and Chief Investment Officer of Summit Global Investments. Mr. Harden has focused on managing institutional assets in low volatility, and he continues to do so at SGI. Mr. Harden is one of only a handful of active portfolio managers in the world that has researched, constructed, implemented and actively managed significant assets in the low-volatility equity space. In his exclusive interview with the Wall Street Transcript, David Harden reveals his methodology for picking low volatility stocks that capture the market upside.
“We are looking for high-quality earnings. What that does is, when the markets go down, we have averaged about 50% to 55% of the down market, and when markets go up, we have averaged about 85% of an up market. That is really our sweet spot.” Mr. Harden identifies high quality earnings and then stocks his portfolio with these equities.
One favorite portfolio pick has a currently contrarian flavor: “We have noticed with Wal-Mart (NYSE:WMT) — and why we hold that stock, and we are very, very positive on the stock as one of our top holdings — is that it has not only very low risk, but it is very cheap relative to its industry. It has very high profitability and great distribution.” Mr. Harden likes the stock for some of the very reasons that others have shunned it: “…people were very worried about them coming into e-commerce and getting gobbled up, if you will, or destroyed by the Amazon (NASDAQ:AMZN) effect….This e-commerce has a lot a growth opportunity for Wal-Mart, which is one of the reasons why our alpha factors are really rating it very well because of its high profitability and its cheapness relative to its industry.”
To see more of David Harden’s top picks and his purchase methodology, read the entire interview at the Wall Street Transcript.
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