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Fund Manager – US Stocks Have Earned Us 20% Returns!
Aspire, Thought Leaders | 06 April 2015
By: Vance Wong
Articles (74) Profile

Source: FactSet

Given that the current S&P 500 is fairly valued at about 14x forward PE, acclaimed fund house, Legg Mason Asset Management continues to stick to its core values for attractive entry points that could potentially put them in a good position. Nevertheless, “companies that can execute and use their balance sheets in accretive ways” are the ones that everyone should keep a lookout for.

Legg Mason certainly knows what it is doing. The fund house’s US Aggressive Growth Fund recently won the coveted Best US Equity Fund award at the Morningstar Fund Awards 2015. Evan Bauman, fund manager of that fund, shared with us insights into the US stock market as well as the fund’s outlook for the coming year.

Healthcare – An Attractive US Buy

In particular, Evan Bauman, a fund manager at Legg Mason told us that the healthcare sector in the US is receiving much attention from the market. Specifically, pharmaceutical companies that are developing drugs.

Of course, Legg Mason puts its money where its figurative mouth is. the above-mentioned fund holds a substantial stake in Biogen Idec Incorporated. The company is known for various drug therapies that have been designed to improve the lives of patients living with chronic ailments.

NASDAQ Index Bubble?

Source: FactSet

Bauman’s team recognises that the valuations for some companies and sectors in the NASDAQ have been above their long-term averages. However, this does not necessarily mean that a bubble is being formed. From a valuation perspective, the NASDAQ Composite is trading at a much lower level than back in 1999. This is especially so for many of the companies that are more diversified now as compared to 15 years ago.

Looking at their fact sheet (as at 31 January 2015), 4.45 percent of the fund is invested in Comcast Corp. This constitutes their largest tech holding, followed by 3.97 percent in Sandisk Corp and 3.65 percent in Broadcom Corporation Class A. Comcast Corp’s share price has increased more than 27 percent (US$47.74 to US$60.70) over the past 52 weeks, making it a rather robust and reliable stock pick for Legg Mason.

Source: http://phys.org/

Comcast Corp revealed in their latest financial statement that their dividends and share repurchases increased by 64.1 percent to US$6.5 billion in 2014. They forecasted that dividends will increase by 11 percent on an annualised basis, essentially justifying its share price on the market.

A core part of Legg Mason’s portfolio is focused on technological companies and the team is more concerned about their valuations and growth prospects, rather than the overall index. Investors should also probably take note of this. Shying away from tech stocks just because of a possibly inflated NASDAQ would only mean that they give up on quite possibly, really good buys.

With a Communications background, Vance has the passion to write with a purpose - to provide content supported with substantial evidence to vested readers.

Please click here for more information about this author.


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