Apple Is Now Boring Enough to Buy for This $37 Billion Fund Managerby
Nordea fund manager sees earnings estimates coming down
Nordea’s Naess says Tesla is a ‘terribly bad’ company
Apple Inc. losing steam only makes it a bargain.
The iPhone maker is cheap and the risk is lower, according to Robert Naess, who oversees 33 billion euros ($37 billion) in stocks at Nordea Bank, Scandinavia’s largest bank.
“Apple is boring now,” he said in an interview at Nordea’s offices in Oslo Thursday. “Before there was no stability and growth was too high.”
Investors have started questioning Apple’s ability to expand after the company ended 13 straight years of uninterrupted sales growth earlier in 2016. Shares are up 6.8 percent so far this year. For Naess, 52, it’s a buying opportunity. He started buying stock in May and now holds about 2 percent in Apple in his funds.
“It’s the first time,” he said. “We’ve had the fund since 2005 and never owned Apple.”
Naess and his partner Claus Vorm quantitatively analyze thousands of companies to build a portfolio of about 100 “boring” stocks. They are investing in companies with the most stable earnings and avoiding expensive stocks. Global Stable Equity Fund has returned 19 percent on average in the past five years, beating 98 percent of its peers.
“Many think it’s a peak, Apple is done and won’t succeed anymore but we look at the long-term earnings trend,” Naess said. “Our case it that they keep their market share and that things will be OK going forward.”
Overall, earnings growth estimates for 2017 are too high, according to Naess. A year from now, global earnings growth will be as low as zero percent, which will cool the market, he said.
While Naess operates strictly by the spreadsheet when it comes to investing, on a personal level his passion is cars, especially Teslas. He and his family have bought so many of the top-end electric cars that Elon Musk’s carmaker at one time banned him from ordering more.
With sales now down, he said he’s once again allowed to place orders and is about to receive a Tesla Model X in the fall. But one thing he won’t buy is the company’s stock.
“Don’t buy Tesla because they lose money all the time,” he said. “Economically, Tesla is a terribly bad company.”
There’s a high risk Tesla won’t make any money because it’s difficult to go from producing 50,000 cars to more than 500,000 cars, he said.
“I think they won’t make it,” said Naess. “I use Tesla as an example of a stock you shouldn’t invest in, even if they make fun and fine cars that I buy.”
While his funds have outperformed in the low rate environment in the years after the financial crisis, Naess sees rising rates as a long-term threat to his funds’ returns.
“It’s difficult to hide from that risk,” he said. “But the risk for that is low. It could happen but it could take 30 years before it happens.”