David Corris, CFA, is the Head of Disciplined Equities and Portfolio Manager, Disciplined Equities at BMO Global Asset Management.
Mr. Corris heads the BMO Disciplined Equity Team and is responsible for equity portfolio management and research. He joined the company in 2008. Mr. Corris began his investment management career in 1999 and was a quantitative equity portfolio manager/researcher at Northern Trust Global Investments and a quantitative equity research analyst at Citigroup Asset Management.
He holds an MBA from Harvard Business School and a B.S. in mathematics and quantitative economics from the University of Wisconsin.
In this 2,426 word interview, exclusively with the Wall Street Transcript, Mr. Corris sees some investment opportunities at hand.
“…We think that for investors with a moderate time frame, small-cap value is best positioned in the current market. Large-cap growth has been leading the market for the last couple of years, and small-cap value has underperformed significantly.
Our research shows that typically small-cap and value strategies outperform coming out of recessions. And what’s really interesting this year is that although the market has rebounded fully since the beginning of the year, small-cap value has still continued to lag large growth, not only on the way down but also on the way back up.”
The political process provides portfolio picks:
“I can give you a few names that tie into both the Democratic and Republican exposures. Two areas where we are overweight right now are industrials and materials.
I mentioned infrastructure would probably benefit on the Democratic side.
One name we like there is U.S. Concrete (NASDAQ:USCR), which is a leading producer of concrete, selling into commercial, industrial and residential channels. They should be a beneficiary of infrastructure stimulus, and they are a large national player.
Another example is MYR Group (NASDAQ:MYRG). They provide specialized electrical infrastructure to U.S. electric utilities. And so as utility spending increases, as they upgrade or fortify the grid, we would expect MYR Group to benefit from that.
I also mentioned renewable energy. An example in that space would be Renewable Energy Group (NASDAQ:REGI).
Renewable Energy Group is the leader in producing renewable diesel. They’re very profitable, a company with a strong balance sheet, and they’re looking to expand into additional renewable markets.
We would note that you typically don’t find a lot of small-cap value clean energy names, but we think this is a name that not only is attractive on its own merits but also thematically as the market continues to embrace ESG and responsible investing.
On the Republican side, I’d mention banks because they tend to be a large weight in the small-cap value benchmark; however, a lot of our peers typically underweight them because they tend to be less liquid.
One of the things that we’ve always built into our strategy is tight liquidity control, which allows us to build baskets of stocks to make sure that we get exposures to large parts of the benchmark that may have liquidity challenges, and banks would be a good example of that.
We own a number of banks, ranging from Cathay General (NASDAQ:CATY) to Wintrust (NASDAQ:WTFC), First Merchants Corporation (NASDAQ:FRME) and Zions (NASDAQ:ZION), all of which help ensure that we have adequate bank exposure in the event that the banks recover from here.”
Get more of Mr. Corris’ portfolio reasoning by reading the entire 2,426 word interview, exclusively with the Wall Street Transcript.