By Philip van Doorn, MarketWatch
T. Rowe Price Group, Inc.
Amid a weeks-long rally in stocks, some investors may already have forgotten how painful it was when the market crashed in late February and March.
For David Giroux, the memory is fresh — not only of sleepless nights, 18-hour days and seven-day workweeks, but of the $9 billion he poured into the market as other investors were running away.
Giroux is the manager of the $39 billion T. Rowe Price Capital Appreciation Fund /zigman2/quotes/204825222/realtime PRWCX +0.82% . Combined with separate accounts managed under precisely the same strategy, he is running a total of $57 billion in assets.
The fund’s strategy is actually a conservative one, “to generate equity-like returns with less risk than the overall market." Its allocation to stocks, bonds and other debt investments shifts over time, but the equity portion averages about 61% through a market cycle, Giroux said in an interview.
T. Rowe Price Capital Appreciation has a five-star rating (the highest) from Morningstar, and is ranked in the top percentile within the investment research firm’s “U.S. Fund Allocation — 50% to 70% Equity” category for five, 10 and 15 years and in the second percentile for three years.
At the end of 2019, the fund was only 55% invested in stocks, with 18% in cash, because the stock market was trading at about 19 times earnings estimates, its highest forward price-to-earnings ratio since 2002.
“We couldn’t find anything that hit our return threshold. I wish I could say [the low allocation to equities] was because we saw the virus coming,” Giroux said.
Heading into the coronavirus crisis, the fund had no positions in shares of banks, and very low exposure, about 0.3%, to energy stocks, he said.
The S&P 500 Index /zigman2/quotes/210599714/realtime SPX +1.49% hit its all-time closing high Feb. 19, after which it fell 34% through the close March 23.
“All told, we put $9 billion to work in the downturn” Giroux said.
Giroux initiated eight stock positions and added significantly to eight more during the 23 trading sessions of the downturn:
|Company||Ticker||Action||Price change - Feb. 19 through March 23||Price change - March 23 through June 1||Price change - Feb. 19 through June 1||Price change - 2020||Price change - 2019|
|Global Payments Inc.||/zigman2/quotes/201234787/composite GPN||Added||-44%||57%||-12%||0%||77%|
|NXP Semiconductors NV||/zigman2/quotes/202999625/composite NXPI||Added||-43%||28%||-26%||-22%||74%|
|Envista Holdings Corp.||/zigman2/quotes/213943840/composite NVST||Added||-58%||80%||-24%||-28%||N/A|
|Humana Inc.||/zigman2/quotes/203095337/composite HUM||Added||-43%||87%||6%||10%||28%|
|UnitedHealth Group Inc.||/zigman2/quotes/210453738/composite UNH||Added||-36%||57%||0%||4%||18%|
|Fortive Corp.||/zigman2/quotes/207268286/composite FTV||Initiated||-45%||48%||-19%||-19%||13%|
|Ingersoll-Rand Inc.||/zigman2/quotes/202048975/composite IR||Initiated||-48%||47%||-24%||-22%||79%|
|Cintas Corp.||/zigman2/quotes/201631915/composite CTAS||Initiated||-48%||60%||-18%||-7%||60%|
|Hilton Worldwide Holdings Inc.||/zigman2/quotes/202780307/composite HLT||Added||-44%||29%||-27%||-26%||54%|
|Marriott International Inc. Class A||/zigman2/quotes/200170042/composite MAR||Initiated||-52%||36%||-36%||-37%||39%|
|Yum Brands Inc.||/zigman2/quotes/209029767/composite YUM||Added||-46%||60%||-14%||-10%||10%|
|PNC Financial Services Group Inc.||/zigman2/quotes/203416310/composite PNC||Initiated||-47%||42%||-25%||-28%||37%|
|Linde PLC||/zigman2/quotes/207314668/composite LIN||Initiated||-33%||37%||-8%||-4%||36%|
|Keurig Dr Pepper Inc.||/zigman2/quotes/201754990/composite KDP||Added||-20%||22%||-2%||-2%||13%|
|Stryker Corp.||/zigman2/quotes/207664662/composite SYK||Initiated||-44%||56%||-12%||-6%||34%|
|American Electric Power Co.||/zigman2/quotes/209801263/composite AEP||Added||-32%||23%||-17%||-9%||26%|
|Data source: FactSet|
Click on the tickers for more about each stock, including company profiles. Scroll the table to see all the data.
All 16 stocks have risen considerably since the market bottom March 23, although all but two were below their Feb. 19 levels as of the close June 1. The purchases were made on various days, so the fund’s returns on the stocks didn’t match what’s on the table.