Reuters Insider - Don't own Zoom? Here's the next best bet: fund manager

Capital Management ADSITS

06/04/2020 07:34

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Source: Reuters Insider

Description: Buy stocks of software companies that boost business efficiency
such as AudioCodes, whose technology helps power Zoom and Skype, says growth
fund manager Gerry Frigon of Taylor Frigon Capital Management.
Short Link: https://tmsnrt.rs/2X62H8l

Video Transcript:

A staggeringly weak jobs report driving stocks South across the board on Wall
Street Friday. The S&P 500 now down more than 2%. Let’s get some views on
that report as well as implications for the stock market. We’re joined by
Gerry Frigon. He is Chief Investment Officer at Taylor Frigon Capital
Management. He joins me now from his home in Paso Robles, California. Welcome,
Gerry.

Thanks, Fred.

Companies cut 701,000 jobs last month. That was seven times higher than what
Wall Street had expected, and that really put an end to the 113th month streak
of job gains. Why wasn’t this affect—the stocks popped up at the
open, but why isn’t the selling more severe?

I don’t think that anybody knew what to expect. $100,000 consensus
estimate I think was purely a shot in the dark. And frankly, I don’t
think any of these kinds of astronomical numbers are going to be surprising,
probably for the next few weeks as the full brunt of this is fully digested.
Look, the market sold off so hard so fast over the course of the last few
weeks. I think the market is right now just sort of in a no man’s land.
There’s not liquidity of much at all in the market. I think that
there’s been such a significant amount of selling and despite the rally
last week which probably the backing and feeling that we’re getting today
is partly some folks that had traded that rally and are taking it off the
table. So I think right now the market has sold off so hard. It’s more
kind of a wait-and-see and so it should just be sloppy I think from here on
out. And so numbers like this, I don’t think anybody’s going to be
surprised that numbers that seem astronomical when you’re hearing some of
the dire predictions that are out there – 30-some odd percent
unemployment rates – so that being the case, nothing is going to be
surprising. And so I think the market is discounted sort of the worst.

And Gerry, you’re also a Portfolio Manager. You manage a growth fund and
you invest your own money in the same investments as you do with your clients.
So what kind of trades have you been making? Have you been tinkering asset
allocations? Have you been making any purchases?

Yeah. We have been looking to buy things that maybe we had had our eye on
before, that we thought might be a little bit over-valued but now obviously
are all on sale to the tune of 30% and 40% in some cases. But more than
anything, and we kind of have a saying in our shop, be centered be still, in
times like this for us because we are long-term investors, we make decisions
not on trading basis but on business basis, for us we’ve been spending
more of our time actually talking to our companies, just getting a sense of
how they’re handling this. And in the aggregate, we’ve actually been
quite impressed and it’s sort of a sign I think of what you probably
should expect from most companies that are well run, that they’re going
to handle this, they’re going to take in stride. We’re certainly
checking to see how companies are financed to make sure that they’re
okay. And in our case, fortunately, our companies are pretty well-capitalized.
So for us, a little bit of buying.

And Gerry, what stocks or sectors are you snooping around right now, that
you’re looking at that you think are—that investors should look at
too?

Yeah. From a space standpoint, from an industry standpoint, I think that any
kind of software that’s going towards efficiency and business, certainly
collaboration. We’ve seen the performance of companies like Zoom. We
don’t own Zoom and we won’t likely be chasing that because
that’s held up so well with all the massive business that they’re
doing because of—

What would you be chasing?

Well, we’re looking at some—we don’t talk about the companies
that we’re looking at. But for example, companies that we own right now
that we think will do well coming out of this are companies like Alteryx in
the software space that help with—helping companies be more efficient
about how they run their business. One of our—we’re very
heavily-invested and focused on is Israel. One of our companies in Israel that
is actually powering the Zoom and Microsoft which we’re talking over
right now is a company called AudioCodes, that we feel very strongly about,
that they will benefit. It’s not as well-known as the Zooms of the world
but they help to power that in the VOIP world. So those are the kinds of
companies that we’re focused on right now, that are already in our
portfolio that we feel really good about and we’d certainly add to as any
dips happen. But yeah, those companies that are helping to make companies more
efficient, be able to help companies save money from the standpoint of how
they run they run business. And that’s going to largely, we think,
they’d place in the software space. So that will be definitely an area of
focus going forward.

Okay. Thanks for some of those ideas, Gerry. Our thanks to Gerry Frigon of
Taylor Frigon Capital Management coming to us from Paso Robles, California.
I’m Fred Katayama, and this is Reuters