Daily Money Tip: Will stocks get back to basics?

Ernest E. Cecilia is chief investment officer for Bryn Mawr Trust. (bmtcwealth.com)
Ernest E. Cecilia is chief investment officer for Bryn Mawr Trust. (bmtcwealth.com)
Posted: February 21, 2014

Ernie Cecilia, chief investment officer of Bryn Mawr Trust Co., says he believes stock prices will eventually have to be driven more by fundamentals than central bank stimulus, which has rocketed the market to new highs since the financial crisis.

That said, what is the firm buying and selling for client portfolios? Bryn Mawr Trust, whose main office is in Bryn Mawr and now oversees $7 billion in assets, prefers "old tech" companies such as Microsoft (MSFT), which boasts a new chief executive, Satya Nadella.

"We started buying Microsoft in January of last year," Cecilia said. The firm also likes Cummins (CMI), maker of diesel and natural gas engines and electric power-generation systems. With sales in North America and emerging markets, it trades at 16 times forward earnings.

"Neither [stock] is expensive when compared to the broader market," he said.

Among sales in the portfolios, Cecilia says, Bryn Mawr has been selling some shares in International Business Machines (IBM).

"We've owned it for some clients for a long time, and it's going to be more difficult for IBM to manage earnings," he said.

Bryn Mawr also swapped out of EOG Resources (EOG), one of the country's largest independent crude oil and natural gas companies. Bryn Mawr sold some EOG after the stock jumped to $180 a share from $120 a year ago and used the cash to buy Helmerich & Payne Inc. (HP). Bryn Mawr bought Helmerich & Payne, a contract drilling company, at around $60 a share. It currently trades at $93.

In fixed income, Cecilia says the firm remains defensive in nature and prefers credit sectors such as high-yield and foreign bonds. It uses funds such as RidgeWorth Seix Floating Rate High Income fund (SAMBX) and Templeton Global Bond Fund (TGBAX).


erinarvedlund@yahoo.com

646-797-0759

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