“As long-term investors, it is very difficult to play short-term events, and it is difficult to say how far-reaching the drought’s impact will be,” said David Damiani, director of risk management at Balentine LLC, an Atlanta-based registered investment adviser overseeing $1.5 billion.
At Balentine LLC, which manages $1.5 billion, Facebook just doesn’t fit into the strategy. “Growth investing is a tough game to play,” said Adrian Cronje, chief investment officer. “The evidence is really not behind people who try to play that game.” Investors in Facebook stock are paying too much for glamour, and not actual value, he said. “In one sense, Facebook is all about how they’re going to execute on the hope of a business plan,” Cronje said.
At Balentine we have long extolled the importance of keeping a strategic liquid reserve (Cash) in investment portfolios. This idea of a risk first approach to investment with an emphasis on immunizing spending needs is gaining in popularity in our industry. To that end, CFA Institute Magazine recently published “The Case for Cash,” written by David Damiani, Balentine’s Director of Risk Management in its Viewpoint column.
Alan McKnight, the director of global investment strategy at Balentine, said taking on currency exposure adds the risk that movements in the currency can influence the overall value of the asset regardless of the underlying characteristics of the asset.
Keep in mind that commodities as an asset class can be volatile and therefore deserve “considerable research and scrutiny,” says Alan McKnight, the director of global investment strategy at Atlanta-based investment advisory firm Balentine. “Investors should be very careful. … It is important that they have a clear understanding of the spot and futures markets,” he says.
Balentine Chief Investment Officer, Adrian Cronje recently participated in a CIO roundtable for The Journal of the CFA Society of the UK. In this roundtable for the Professional Investor section, Adrian and other CIOs from venerable institutions discussed getting the right information for effective decision-making.
“Profit levels are already at record highs. So Corporate America has to start showing sustainable revenue growth to justify current stock valuations. That is key. And there are considerable headwinds for companies to digest,” said Adrian Cronje, chief investment officer at Balentine in Atlanta.
The firm gives investors the ability to choose whether they want to be party to all decisions about their money, said President Jeff Adams. “We believe that offering both appropriate. There are still clients who prefer to make the decisions themselves,” he said. Still, “We have more clients than not that trust us to do it for them.”
Progress in the European debt crisis and better US economic data over the last three months have led to significantly less market volatility. As risks to the near-term outlook have abated, momentum in global equity markets has accelerated. Based on the long-term attribution of our returns, such an environment typically provides a compelling backdrop for us to harness the power of our quantitative models, because during such “normal” market environments, underlying asset class performance trends persist for longer.
Managing cash is an important component of risk management. By “immunizing” near-term spending requirements in an appropriate way, Balentine helps clients pursue their long-term investment goals while maintaining a pool of assets and reserves. Last fall in “When Cash is King,” we outlined Balentine’s reasons for holding cash and other liquid reserves and our process for determining how much to hold at any given time. In part two of our discussion, we will discuss how and when to refund cash and implementation options for this part of the portfolio.