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December 21, 2016 at 10:32 AM
David Samra, the award-winning stock picker, is boosting cash holdings close to their limit in a market he sees as lacking buying opportunities.
Samra, who oversees about $33 billion for Artisan Partners, says he increased cash to about 13% of his international fund, near the 15% maximum, as equities around the world extend rallies after Donald Trump’s election. While he’s been selling companies that he sees as reaching their true worth, he’s found it harder to find stocks to replace them.
The value investor makes no claim to being able to time the market, but his views on valuations can sometimes provide clues on its direction. In February, days before global equity markets ended a sharp downturn, Samra said he was buying again. These days, he’s spending more time seeking out ways to help improve the companies he already owns, such as Samsung Electronics Co. and UBS Group AG.
“When stock-market rallies are broad-based like they are now, it makes it more difficult to find significantly undervalued securities,” Samra said in an interview in San Francisco, where he’s based. Valuations in the portfolio will often “give us a rough reflection of the opportunity set that exists out in the market place.”
The MSCI All-Country World Index of global shares has jumped about 20% since a low on Feb. 11. It traded last week at the most expensive level in almost seven years, when measured by price to estimated earnings. U.S. equities advanced to records in the wake of Trump’s victory, with the Dow Jones Industrial Average climbing to within 40 points of 20,000.
Faced with a shortage of stocks to buy, Samra is spending more time on those already in his portfolio.
He’s calling on Samsung, his biggest holding, to put at least three “international C-suite executives” on its board, and said he met with representatives of the company that day in San Francisco. Artisan Partners has a stake of about $2.1 billion in the company, according to data compiled by Bloomberg.
Issues like the Galaxy Note 7 battery fires, which led Samsung to kill off the smartphone, might have been avoided if the company was better run, Samra says, while noting that he also wants increased shareholder returns and for Samsung to list American depositary receipts.
Samsung said last month that it’s looking at a plan to turn itself into a holding company, an idea that was presented as a way to improve shareholder value and address calls from Elliott Management Corp. for more responsive management. Such a move would also have benefits for Samsung and the founding Lee family.
