Commentary: NCM Core Global and NCM Core International

TRANSCRIPT

Hi. It's Tuesday, August 8th. My name is Phil D’Iorio, the manager of the NCM Core Global and Core International mandates and today I'm going to give an update focusing on our current thinking on the markets, some of the capitulation that we've seen from the sell side strategists, our positioning for the global and the international funds, and also talk about the good and the bad on some of the things that we've done and haven't done this year. And then an update on one of our portfolio holdings, Novo Nordisk.

So just starting with our current thinking, we're still using a soft landing as our base case. We continue to see moderation from the high levels of inflation that we saw last year and earlier this year. Economy seems to be chugging along. Corporate earnings are coming in, so we still see a soft landing for the economy.

One thing that we've noticed from the beginning of the year when there was widespread bearishness is that there has been some capitulation from various strategists on Bay Street and Wall Street. Listed a few here. Just last week, Oppenheimer strategists increased their S&P price target to 4,900, up from 4,400 previously. And the day before that, Citigroup did the same thing, brought their target up to 5,000 from 4,400. Back in June, Goldman Sachs did the same thing back in May., Bank of America. You know, this is good. And the one thing that I still see is there's actually still a lot of bearish strategists out there that haven't changed their targets. And they're starting to look a little bit out of date. So we probably will see more of this happening in terms of the positioning.

We started positioning the funds to be more cyclical at the beginning of this year, and that was on the back of the sell off that we saw last year with sort of a capitulation back in October of last year, felt that the markets were baking in a lot of bad news. But we also had this thought that inflation was going to come down and that there was actually the possibility of a soft landing and not many people thought that that was possible. So been adding throughout the year to more cyclical areas of the market. Some of the sectors such as technology, consumer discretionary, industrials and were positioned for this soft landing.

I thought I’d talk about some of the good and the bad moves that we've made. I'll start with the good and end with the bad. Meta Platforms is a name that we used to own several years ago. We sold it in 2022. We were quite disappointed. Everything seemed to be going wrong with the company, but the worst part about it was them telling us they were going to invest $10 billion in the metaverse. And so we got out of the name at $237. We watched it fall by close to 70%. But then as it started rebounding, we started looking at the name again and started to realize that a lot of the reasons we sold the stock were no longer reasons to be negative about the stock. So earlier in 2023, we actually bought back in at $177 and now trading over $300. So that one worked out well for us.

Novo Nordisk I have a separate slide for, but it is a name that we've owned in our international fund for a long time, and it's a new purchase that we made in the Core Global Fund a few months ago, and that's working out well, especially today with the news, which I'll get to.

You know, in terms of things that I wish I had done differently, you know, would have been nice to have trimmed back some of the winners from last year. The health care is a sector that I think of that, you know, held in really well during the market turbulence last year. You know, maybe should have taken more profits there and recycled it into something else. But, you know, there's always going to be a little bit of the “woulda coulda shoulda.”

So now on to Novo Nordisk. So they have a compound called Semaglutide, which is a key compound in their diabetes drugs and also their newer weight loss drugs, which are getting a lot of media attention. And more recently, they've been running a clinical trial to see if this compound can actually reduce the risk of cardiovascular events. And the results of this select trial were actually published today, and the results were very positive for the company. There was a 20% reduction seen in cardiovascular events in this clinical study. And the company noted in their press release today that, you know, up until now there hasn't been any weight management drug available in the market that not only allows people to lose weight, but also reduce the risk of cardiovascular event, whether it's a heart attack or a stroke. So today's news is being treated very positively for Novo Nordisk. Last time I checked, stock was up over 15%. So that's good for us.

So just some concluding thoughts about what I've been talking about today, you know, we remain cautiously optimistic on global equities. We're positioned for a soft landing. And, you know, this weakness that we started to see in the last week or so, it might stick around for a few weeks or a couple of months, but we're going to look to deploy capital and buy on that weakness. Thank you very much for your time.

Disclaimer:

Phil D’Iorio is a Portfolio Manager, with Cumberland Investment Counsel Inc.(CIC). CIC is the sub-advisor to its affiliate, NCM Asset Management Ltd. The information in this video is current as of August 8, 2023 but is subject to change. The contents of this video (including facts, opinions, descriptions of or references to, products or securities) are for informational purposes only and are not intended to provide financial, legal, accounting or tax advice and should not be relied upon in that regard. The communication may contain forward-looking statements which are not guarantees of future performance. Forward-looking statements involve inherent risk and uncertainties, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.