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March 27, 2020, 7:50 a.m. EDT · CORRECTED

This portfolio manager draws on 2008 lessons to find stocks that will outlast a pandemic

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By Barbara Kollmeyer, MarketWatch

Corrects reference to Nestlé and performance of Levin Easterly versus its benchmarks.


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We’ll be back.

Our call of the day comes from a portfolio manager who draws on what he learned from the 2008 financial crisis to navigate tricky equity markets:

“Don’t try to call the bottom, but continue to nibble at very good companies with extremely good long-term prospects that will be OK,” advises Sam Hendel, president and portfolio manager at Levin Easterly, which has $5 billion under management. He worked at a hedge fund firm during the financial crisis, but said Levin Easterly performed better than benchmarks — up 16% over S&P /zigman2/quotes/210599714/realtime SPX -0.20%  and up 20% over the Russell 1000 /zigman2/quotes/210598144/delayed RUI -0.11% — by sticking to those principles.

Hendel told MarketWatch that his firm has been extremely active in the past few weeks, picking through market dislocations to find beaten-down, decent companies that will answer to what consumers will need in the months ahead — food, broadband and medical equipment. “We’re trying to play defense and find defensive names that have offensive elements,” he said.

That leads him to pharmaceutical groups AbbVie /zigman2/quotes/202428675/composite ABBV -0.87%  and Pfizer /zigman2/quotes/202877789/composite PFE -0.42%  that “got hit very hard and are very undersold. We think the businesses will be quite stable,” he said.

Primo Water /zigman2/quotes/209463606/composite PRMW -1.13% , which supplies water to offices and competes with Swiss-based Nestlé /zigman2/quotes/208115528/delayed CH:NESN +0.06%   /zigman2/quotes/210131093/composite NSRGY +0.28% , is a company worth holding, he said.

Add to that group multinational Tyson Foods /zigman2/quotes/201117502/composite TSN -1.69%  and chemical group DuPont /zigman2/quotes/203606582/composite DD -0.57% , due to merge with International Flavors and Fragrances /zigman2/quotes/206698429/composite IFF -2.51% , a company that itself held up well during the 2008 crisis, he said. Telecommunications groups Comcast /zigman2/quotes/209472081/composite CMCSA +0.12% and AT&T /zigman2/quotes/203165245/composite T -0.89% /zigman2/quotes/203165245/composite T -0.89% are two others he likes, and laboratory servicing company Quest Diagnostics /zigman2/quotes/201001842/composite DGX +0.50% .

Hendel sees a “very chaotic and difficult year” ahead, but it is also a good time for stock pickers. “If we keep cool heads we can evaluate what we think has earnings power,” he said.

The chart

Pimco tweeted out this chart that shows what happens when we let “natural, human emotional reactions to stressful markets” influence investing decisions:

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3,373.43
-6.92 -0.20%
Volume: 1.94B
Aug. 13, 2020 4:20p
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/zigman2/quotes/210598144/delayed
US : US Composite
1,871.55
-2.02 -0.11%
Volume: 2.73M
Aug. 13, 2020 4:30p
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/zigman2/quotes/202428675/composite
US : U.S.: NYSE
$ 94.68
-0.83 -0.87%
Volume: 6.00M
Aug. 13, 2020 4:02p
P/E Ratio
20.14
Dividend Yield
4.99%
Market Cap
$168.56 billion
Rev. per Employee
$1.09M
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/zigman2/quotes/202877789/composite
US : U.S.: NYSE
$ 38.17
-0.16 -0.42%
Volume: 14.53M
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P/E Ratio
15.18
Dividend Yield
3.98%
Market Cap
$213.00 billion
Rev. per Employee
$580,595
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/zigman2/quotes/209463606/composite
US : U.S.: NYSE
$ 14.92
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Volume: 856,345
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P/E Ratio
N/A
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1.61%
Market Cap
$2.42 billion
Rev. per Employee
$217,697
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CH : Switzerland: SWX
CHF 109.08
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P/E Ratio
23.37
Dividend Yield
2.48%
Market Cap
CHF303.63 billion
Rev. per Employee
CHF296,880
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/zigman2/quotes/210131093/composite
US : U.S.: OTC
$ 119.64
+0.33 +0.28%
Volume: 120,431
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P/E Ratio
25.07
Dividend Yield
1.95%
Market Cap
$333.49 billion
Rev. per Employee
$303,353
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/zigman2/quotes/201117502/composite
US : U.S.: NYSE
$ 64.60
-1.11 -1.69%
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P/E Ratio
13.19
Dividend Yield
2.60%
Market Cap
$23.48 billion
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$330,628
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/zigman2/quotes/203606582/composite
US : U.S.: NYSE
$ 58.02
-0.33 -0.57%
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P/E Ratio
N/A
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2.07%
Market Cap
$42.82 billion
Rev. per Employee
$877,316
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/zigman2/quotes/206698429/composite
US : U.S.: NYSE
$ 123.81
-3.19 -2.51%
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Aug. 13, 2020 4:00p
P/E Ratio
33.27
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2.49%
Market Cap
$13.58 billion
Rev. per Employee
$305,965
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/zigman2/quotes/209472081/composite
US : U.S.: Nasdaq
$ 43.39
+0.05 +0.12%
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Aug. 13, 2020 4:00p
P/E Ratio
17.40
Dividend Yield
2.12%
Market Cap
$197.98 billion
Rev. per Employee
$513,625
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/zigman2/quotes/203165245/composite
US : U.S.: NYSE
$ 29.91
-0.27 -0.89%
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P/E Ratio
18.27
Dividend Yield
6.95%
Market Cap
$215.03 billion
Rev. per Employee
$637,332
loading...
/zigman2/quotes/203165245/composite
US : U.S.: NYSE
$ 29.91
-0.27 -0.89%
Volume: 24.36M
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P/E Ratio
18.27
Dividend Yield
6.95%
Market Cap
$215.03 billion
Rev. per Employee
$637,332
loading...
/zigman2/quotes/201001842/composite
US : U.S.: NYSE
$ 121.75
+0.60 +0.50%
Volume: 650,378
Aug. 13, 2020 4:02p
P/E Ratio
22.13
Dividend Yield
1.84%
Market Cap
$16.27 billion
Rev. per Employee
$163,717
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Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @bkollmeyer.

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