Point View's Dietze Likes: Financials, Energy, Lat Am (Audio)

US interest rates. The SMP five hundred indecks down now fifteen points at one seventy one, a drop of seven tenths of one percent. We've got the down Jones Industrial Average down ninety three points, a drop of five tens of one percent. Naz stack is down fifty three points, a drop of one percent. The tenure down to thirty seconds, the yield one point five five percent, Gold down seventeen sixty the ounce the thirteen twenty four, a drop of

one point three percent. And crude oil West Texas Intermediate down two point nine percent, declining a barrel to forty six dollars. And see, I'm Charlie Pellett, and that's of Bloomberg Business Flash. This is taking stuff with Dathlee Hayes and Grim Box on Bloomberg Radio. Hi'm Alex Brinka and for Kathleen Hayes today. Um, and now we are looking

for great investment opportunities. Here with a few from his book of tricks is David Deet's founder, President and chief investment Strategies at Point View Wealth Management, who helps oversee about two hundred and fifty million dollars from Summit New Jersey. David, where are you finding opportunities these days? Well, we're looking at areas which are out of favor, have not performed well. The evaluations look attractive, and really there's some reason for

a callus for better opportunities ahead. The first one I would highlight is financial services. Um, there's no bubble there, despite the other marketing industries near record highs. In fact, this is the one group that has never really recovered. And why are they being held back? The first one, of course, the first reasons is the low interest rates is keeping a lid on their pricing on their loans.

And certainly by two by Friday at this time, we'll know a little bit more about perhaps the trajectory of interest rates. Most people think industrates are going up eventually, this may be a great opportunity to take positions in financial services stocks, particularly banks, to take advantage of potentially high strates going forward. Thanks, are we talking US firms? Yeah, we're We're we're us focused here. Um, we think there's playing opportunities on this side of the pond. One we

would site is Bank of America. Bank of America has one of the best franchises in this country, with a coast to coast network of banks uh in all fifty states. Um. They cover the gamut from investment banking to retail banking and loans and dealing with high net worth investors needs. Yet this is a stock to selling it just two thirds of tangible book values, suggesting is worth more dead

than alive. And we think ultimately, if people see a path forward on interest rates, people will develop more interest in Banks America Aside from fundamentals, Are there other catalysts you are considering? What I mean? Morgan Stanley comes to mind with value Act getting involved. There are there other kind of potential upside catalysts that that play into your investment decisions? Yeah? Absolutely, they got The banks got off to a bad start this year because of concerns of

the quality of their energy loans. But since we've seen energy prices advance about eight from their Fabruary low, I think some of the concerns there has dissipated. Second, of course, banks have been your traditional source of dividends, but they've been held back because of the need to get permission

from regulators and past these so called stressed us. Well, at the beginning of the summer, all US banks pass the stress staff, and their plans to return capital of the shareholders in the form of buy backs and dividends were all validated by regulars. So I think you could easily see a situation where the banks start to pay back a lot more of their earnings, and that's going

to attract investor interests. David Deeds just comparing JP Morgan Chase, for example, in Bank of America, the yield a dividend yield on Bank of America under two percent, the yield for JP Morgan Chasing a nearly three percent. Shares of Bank of America down eight and a half percent this year. JP Morgan Chase basically unchanged. Why would you favor one over the other. Well, because the book value on Bank of Americas is two thirds of tangible book value, while

JP Morgan's is one point three. So I think there's a lot of room for ketchup. In Bank of America the price the earning free issues. There's somewhat similar suggesting that Bank America is paying out a much lower uh percentage of their profits in the form of dividends. Again, I can see ketchup. So here again investing the laggard for a catchup and try and outperform in that manner. Outside of financials wherelse are you looking? We like energy?

Yeah we do. I mean, you know, one of the reasons people are fraught within decision now is you've got the stock market indessees knocking on all time high levels. But of course that's not the case in energy. Anyone who needs to know why, Hey, in Arizona you can buy gasoline at a dollar eighty one a gall at the pump just a couple of years ago, where we're about five dollars a gallon. So energy is the the anti bubble um And of course economics one oh one.

So just here's what happens um second year in a row of a downtrend in capital expenditures, the number of drilling rigs has been flashed basically, UM people have been laid off left and right. The banks don't want to lens the air anymore. So production and supply is propty. So we think we're going to get in to a situation now that energy prices about half what they were, where that supply demand starts to stabilize and ultimately starts to move up. And so we're looking for first class

energy companies to take advantage of that trend? Are we talking old services companies, drillers, explorers? Where do you sign the most opportunity? You know, I think across the board. One company that we're highlighting here is Baker Hughes. Baker Houston's at fifty two dollars to share. Now last year, late last year, Haliburn took our run at it. Remember Halibern, Baker Hughes, Slamberget, and Weatherford are the big four and

oil services. So you had the number two and number three wanting to get together um to form a much bigger competitor to Slamberge. Haliburn offered seventy dollars to share for this doctors now fifty two, so you know what they thought was fair value. Unfortunately the deal did not go through for anty trust concerns. If I think it highlighted value, a lot of people who were in a

short term for that merger have left. And so if you're an energy bowl as we are, longer term, we think Baker Hughes is an attractive way to play the improving investor cast flow into the energy space. When you talk about Baker Hughes, the yield there at one point three percent, would you consider buying one of the major integrated oil companies like Royal Dutch shell shares they're paying about seven and a half percent. Well, you know, we

we liked the sector overall. Again, companies like Royal Dutch Total VP they're also under pressure because they're non domestic. People are very leery of European stocks. As a result, you're getting better dividends. So I mean, the interesting thing is you're getting under one percent for a ten year English sovereign bond in Royal Dutch, headquartered in in uh London is paying seven percent. What am I missing here?

That looks like an attractive area for a portion of your money U S investors, But are there other opportunities outside of domestic equities? That you are looking. Yeah. I mean one area that we like is emerging markets. Of course, you know Latin American stocks, TENNY stocks, they had just went gang busters in the first decade of the century, but over the last six years they have slowed down dramatically, but the fundamentals are still intact. One is they've got

the younger demographics, so there's much better growth potential there. Um. The second, of course, the valuations. We're struggling with some of the highest valuations we've seen the last twenty years, but the price earning multiples in the emerging markets is about ten or eleven, so they're very attractively priced. Um. The one area that we're particularly focused on is Latin America.

Why is commodity based If we're right on our energy call, and I think that goes to other commodities like copper and iron ore devil buy some stability there right now. Of course they're under the cloud because of political turmoil. But what we're saying, for example, in Brazil they're impeaching

the president. Um. Those um, you know, non free market forces are being pushed back a little bit, and so we think the valuations are attractive in some of those areas and can provide a place to put your money in this very low interest rate environment, and you're very fearful for the high valuations on US domestic stocks, David diets I was taking a look courtesy of your research at the Fidelity Latin America Fund. The symbol there is f l A t X and U to dated something

more than thirty. Is it too expensive now? No, I don't think so, because since two thousand and ten is down thirty notwithstanding that recent gain versus about SMP. But just drilled down into some of the fundamentals that David n yield on that portfolio courtesy Warning Star is four point eight percent versus just two point three percent the SMP five hundred, and the price to earning creation that portfolio versus the SMPS nineteen now ad mentally more volatilely there.

But for those fearful of the higher valuations in the sky high prices here, we think that if you like dividend yield, cheaper valuations, this is a home for a portion of your money. Thanks very much for spending time with us. David Dietz is the founder of the President and the chief investment strategist for Point View Wealth Management, helping to manage more than two hundred and fifty million dollars.

Based in Summit, New Jersey. He's speaking about investing in energy stocks such as Baker, Hughes, Schlumberge, and Halliburton, as well as bank stocks a Bank of America, JP, Morgan, Chase, Wells Fargo, and he also likes Latin America with the Fidelity Latin America Fund f l A t X. This is taking stock on Bloomberg. I'm PIM Fox. I want to thank my co host Alex Barrinka. Thanks John, Are

you kidding? It's wonderful to have you. Alex Barrinka of Bloomberg News knows everything there is to know about initial public offerings. We're going to take you through to the close on Wall Street next