Allan Small, senior investment advisor with Allan Small Financial Group at iA Private Wealth Inc. in Toronto.The Globe and Mail
Money manager Allan Small has been using the latest market downturn to upgrade his portfolio, selling off what he calls “B-class” stocks and replacing them with “A-class” companies that recently went on sale.
“These are names you always wanted to own but were just too expensive,” says Mr. Small, senior investment advisor with Allan Small Financial Group at iA Private Wealth Inc. in Toronto, who oversees more than $400-million in client assets.
Examples include some of the big U.S. tech stocks that plummeted in April amid the market turmoil caused by U.S. President Donald Trump’s tariff war.
“I’ve been trying to take advantage of the situation because even though the current president has caused a lot of volatility … he’s a businessman and I believe that over his term, the markets will rebound, as they have started to already [since the April selloff],” he says.
Mr. Small’s portfolios include North American equities and bonds, the mix of which depends on the client’s risk tolerance and investment timeline.
As of May 26, his average equity portfolios for medium-risk investors returned between 13 and 18 per cent over the past 12 months (the range is due to different asset allocations). The three-year annualized return was about 16 per cent. The performance is based on total returns, net of fees.
The Globe spoke with Mr. Small about what he’s been buying and selling.
Name three stocks you own today and why.
Amazon.com Inc. AMZN-Q is a stock I’ve owned for clients for a couple of decades and continue to buy on dips, including recently when it got down to US$170 a share.
I believe Amazon is one of the best companies in the world. I buy it for its diversification across sectors – its cloud business, retail and entertainment, including more recently live sports. I also think it has a strong management team.
Even today, at US$200, I think it’s a good level to buy because I think it will be a winner over the long term. It’s expensive, but rightfully so, in my opinion. It’s hard to compare Amazon to other companies. It’s in a category of its own.
Meta Platforms Inc. META-Q is another stock I buy on the dips, including again recently. We bought Meta when it was down about 30 per cent from its highs, and it’s up about 15 per cent so far on that most recent purchase.
Meta has great management; chief executive officer Mark Zuckerberg continues to innovate and grow the business. Meta also has a huge presence with its Facebook, Instagram and WhatsApp apps, which are used by more than three billion people daily. It also has a very successful online advertising business. We think it’s a great story and will continue to be a winner over the long term.
Bank of Nova Scotia BNS-T is a stock we’ve owned for more than 20 years for clients and bought more of recently in the high-$60 to low-$70 a share range. It has the highest-paying dividend of the major bank stocks in Canada and is a good turnaround story.
Scotiabank has been restructuring away from its international business in South America and focusing more on the U.S. I like what it’s doing. It will take time, but in the meantime, you’re getting a 6 per cent dividend yield while you wait. I own all the banks, but lately my emphasis has been on Scotiabank and Toronto-Dominion Bank TD-T.
Name a stock you sold recently.
Pfizer Inc. PFE-N is a stock I’ve been selling aggressively in recent months after holding it in my client portfolios for about 20 years.
I got frustrated with the stock. It’s been cheap for a few years now, but it’s been a value trap in my opinion. Even though the company has expanded its business further into oncology, people still look at Pfizer as a pandemic stock that benefits from vaccines, and people aren’t getting those vaccines as much anymore. Still, the company can’t seem to shake that reputation. It will, eventually, but it was time to move on.
We lost money on the stock but scraped by with a small gain when you factor in dividends paid over the years.
This interview has been edited and condensed.