Portfolio manager discusses seeking undervalued stocks and the importance of patience. Insight into healthcare and pharmaceutical sector innovation. Analyst shares experiences with nuclear plant construction. Importance of building relationships and trust at Capital World.
Alan Berro emphasizes the importance of analyzing future earnings growth and focusing on individual companies rather than macro trends in the current investment environment.
Barrow sees the healthcare and pharmaceutical sector as an area of innovation with promising opportunities and highlights the appeal of established companies like Lilly, Gilead, and Merck.
Deep dives
Investment Environment and Valuations
The podcast discusses the current investment environment, highlighting the challenges faced by value investors in a market dominated by the Magnificent Seven growth stocks. The guest, Alan Barrow, expresses concerns about valuations and emphasizes the importance of analyzing future earnings growth. He shares his approach of focusing on individual companies rather than macro trends and highlights the uncertainty around whether the remaining companies can produce enough earnings growth to offset the dominance of the Magnificent Seven.
Investment Opportunities in Healthcare and Pharmaceuticals
Alan Barrow mentions his focus on the healthcare and pharmaceutical sector, which he sees as an area of innovation with promising opportunities. He highlights the advancements in weight loss drugs and cancer treatments that are extending and improving lives. Barrow expresses interest in established companies like Lilly, Gilead, and Merck, along with other companies that are not necessarily "darlings" in the industry but still offer reasonable valuations and promising pipelines.
Investment Style and Consideration of Election Results
Alan Barrow describes his investment style as value-oriented, seeking out companies with strong underlying franchises that have been undervalued due to short-term challenges. He explains that his investment decisions are primarily driven by company-specific factors, focusing on areas where market expectations are low and potential upside outweighs downside risks. Barrow also emphasizes his disregard for the impact of election results on his investment process, preferring to concentrate on thorough analysis of individual companies rather than macro predictions.
In a stock market driven by highly valued companies, Capital Group portfolio manager Alan Berro prefers to seek out stocks that go on sale. How does he identify them? Research and patience.