MARKET OUTLOOK:

We have no targets for market averages and do not manage money relative to the indexes. Our funds, Dynamic Global Dividend Fund, Dynamic American Fund, Dynamic International Discovery Fund and Dynamic Global Discovery Fund invest in a concentrated portfolio of high-quality companies that we think will do well over the next 3-5 years. We also offer Dynamic Global Asset Allocation Fund, a balanced fund with a concentrated portfolio of equities and fixed income.

When we own companies that are in cyclical industries, we do have a positive medium-term view of the industry. The industries we presently like include but are not limited to energy (Devon, Equinor), home improvement retail (Home Depot, Lowe’s), managed care (United Health), sensors (Halma, Hamamatsu Photonics), construction (Belimo, Sika), defense (Elbit Systems), semiconductors (Inficon, KLA), composite materials (Schweiter), and many others.

Many of the industries we have invested in are not deeply cyclical. They include but are not limited to cosmetics (Estée Lauder, L’Oreal), distilled spirits (Campari), coffee (Strauss), retail (Costco) and many others.

When we are negative about an industry, we do not invest in it at all and assess the impact of negative developments in that industry on our other investments. 

The fixed income positioning of Dynamic Global Asset Allocation Fund is zero weight corporate bonds and no exposure to duration.

Investors should consider whether they are taking appropriate risks with respect to commodity prices, interest rates and currencies. Most investors do not. They buy the index or use a closet index portfolio manager and take risks they don’t understand.

Simply put, we invest in companies we like and have no exposure to developments in the global economy that concern us.

 
TOP PICKS: 

Taiwan Semiconductor Manufacturing Company, Ltd. (2330 TT)
Based in Hsinchu, Taiwan. Is the largest dedicated contract semiconductor manufacturer in the world, with roughly 50 per cent market share. The company handles manufacturing for semiconductor and integrated device companies that don't have their own manufacturing facilities. The gross profit margin is over 50 per cent, operating margin around 30 per cent and return on invested capital of around 20 per cent.

Berkshire Hathaway (BRK/B NYSE)
Is an Omaha, Nebraska-based holding company with operations in domestic primary property and casualty insurance and global underwriting of reinsurance. Given the claims development in business interruption insurance and an elevated level of natural disaster claims, we anticipate a firm pricing environment. They also own one of the nation’s largest railroads, BNSF, and have significant industrial operations at Marmon Corporation and will benefit from a growing economy. The company has a significant cash position and can drive earnings through acquisitions and stock buybacks. 

Elbit Systems Ltd (ESLT IT)
Is a Haifa, Israel based manufacturer of military hardware. Their product lines include unmanned systems, electronics including fire control, software defined radios and radars, cyber, night vision, precision guidance and underwater warfare. Generally, electronics spending grows at twice the rate of the growth of defense budgets. The recent acquisitions including Harris Night Vision and Sparton significantly increase their Total Addressable Market. An industry leading book to bill drove backlog to a level of $13.6 billion. 

 

PAST PICKS:

Sika AG (SIKA SWX)

• Then: (Swiss francs)250
• Now: (Swiss francs) $336
• Return: 33.97%
• Total return 35.2%

Keyence Corporation (6861 TYO) 

• Then: (in Yen) 57, 700
• Now: (in Yen) 62,200
• Return 7.8%
• Total return 8.15%

Taiwan Semiconductor (TSM NYSE) 

• Then: US$126.45
• Now: US$140.66
• Return: 11.23%
• Total return: 13.0%

Total Return Average: 19%