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Global Stock Manager of $4 Billion Has No Interest in Apple

  • Small companies outperformed bigger ones over time, Poole says
  • Sees value, size and momentum contributing to excess return

For Storebrand’s global stock fund smaller is better.

Avoiding the largest companies has helped Storebrand’s Global Multifaktor fund beat its benchmark by 8.6 percent since restructuring in November 2013, according to Andreas Poole, who manages about 32 billion kroner ($4 billion).

“We can own pretty big companies but we will never own Apple,” he said in an interview Monday. “We will never own the world’s biggest companies.”

The fund seeks to outperform by merging four separate portfolios each selected to take advantage of the historical performance of size, value, momentum or low volatility, the combination of which minimizes the risk of mistiming the market. It excludes any companies that belong to the worst 10 percent in any of the factors.

The key is that value, size and momentum all will contribute to excess return going forward, each at different times.

“The small companies have proven to outperform the big ones over time,” he said. “One simple reason is that high market cap could be an indicator of high price. There’s also a liquidity premium that you will get paid for.”

The $1 billion fund, which holds 250 to 300 stocks, was in the 88th percentile among its peers in 2015. Since November 2013, the low volatility factor has paid off best for the fund with an excess return of about 31 percent.

“It’s because we’ve had a market with low rates,” he said. “At some point it will reverse. Then value stocks that have done worst could quickly be the best performing.”

But in order to get a “proper stock rally” the market needs to see earnings growth driven by economic growth, he said.

“It has been a focus on low costs,” Poole said. “There will be no earnings growth from even lower costs. That will be hard. So it must be the top line growth.”

The fund’s biggest holdings are Annaly Capital Management Inc., health care company Henry Schein Inc., Waste Management Inc. and health benefits company Anthem Inc. Poole also favors stocks in finance, mainly insurance companies in North America, and utilities. Everest Reinsurance Group, Consolidated Edison Inc., Lear Corporation and Taylor Wimpey Plc are among his top picks.

“Everest makes less money than before but it still looks low priced,” he said. “In utilities we find a lot of good companies within low volatility. Stocks that are well prepared for a downturn. People always need electricity and water.”

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