Jordan Cvetanovski of Pella Funds Management names the companies that will own in times of uncertainty, some of which performed well during the global financial crisis and Covid. Speaking to CNBC Pro Talks last week, he noted that global headwinds are shaking up the stock market, and some sectors will benefit. Stock exchanges are one such category of company, according to Cvetanovski, chief investment officer and portfolio manager at Pella. “We own companies like CME, Deutsche Borse and a small company in the Netherlands called Flow Traders, which are market makers in ETFs and ETPs,” he said on Wednesday. “What happens in times of uncertainty is that volume obviously increases as people trade more and margin increases,” he said. These companies make money on the difference in the buying and selling prices, which is called the spread. “I would say their best quarters were Lehman and Covid,” Cvetanovski said, referring to the market crash during the global financial crisis in 2008 and the coronavirus pandemic. Instead of buying put options to protect their assets, investors may want to consider buying companies that pay dividends and do well during volatile periods, he said. Flow Traders’ share price rose about 22% as global stock markets plunged in late February 2020, he said. He gained about 75% from the start of the Covid slump to early July, he added. Supply chain issues Another uncertainty in the market is supply chain bottlenecks, including those caused by the ongoing Russian-Ukrainian war, Cvetanovski said. Canadian fertilizer company Nutrien could do well in that environment because the potash and fertilizer market is likely to be tough for a long time, he said. “Pretty good for a company like Nutrien now, which has a very low marginal cost of about $60 and they’re selling it for $800,” he added. In times of uncertainty, it all comes down to “thinking a little bit and diversifying risk,” Cvetanovski said. “By placing some bets in places where you think, to the best of your ability, you’re looking at some predictability of profit.” He said he sold banks and real estate companies as mortgage defaults spiked before the global financial crisis, and exited the market when reports surfaced that China was building field hospitals at the start of the covid pandemic. Don’t Buy Banks On the other hand, Pella Funds Management does not currently own bank stocks, Cvetanovski said. “We don’t have any banks anywhere, because generally you would be buying banks as interest rates go up. But generally, interest rates go up because the economy is so strong. We don’t have that now,” he said. Interest rates are rising because of inflation and not because of good economic performance, he said. “For [banks]It’s not a big proposition, so banks are not on our radar at the moment,” he said, adding he would be “extremely cautious” especially given debt in the real estate market in some countries such as the Netherlands and Australia. .
Jordan Cvetanovski of Pella Funds Management names the companies that will own in times of uncertainty, some of which performed well during the global financial crisis and Covid.