Daymon Loeb, partner and chief executive officer at Ravenstone Capital Management Inc. in Toronto.The Globe and Mail
As stock markets continue to climb and bubble fears heighten, money manager Daymon Loeb urges investors not to try timing the market.
“We counsel clients to do their best to ignore the ‘noise.’ Do not make emotional decisions,” says Mr. Loeb, partner and chief executive officer at Ravenstone Capital Management Inc. in Toronto, which oversees about $450-million in assets.
“We’ve been doing this a long time and have seen just about everything going back to the late 1990s. We would’ve done a disservice to our clients had we reacted by selling high-quality businesses every time pundits claimed we are due for a pullback or worse.”
In fact, Mr. Loeb says some of his best investments were made during times of extreme uncertainty and heightened volatility.
“The worst thing one can do over time is interrupt the compounding process and potentially increase unnecessary taxes payable along the way,” he adds. “The overarching message to clients is always to make informed decisions and stick to your specific plan to increase your odds of experiencing positive outcomes.”
The Ravenstone equity portfolio, which includes about 18 to 25 businesses, has returned 5.7 per cent so far this year and 8.6 per cent over the past 12 months. The portfolio’s three-year and five-year annualized returns were 17.1 per cent and 11 per cent, respectively. The annualized return since inception on April 1, 2016, is 13.1 per cent. The performance is based on total returns, gross of fees, net of expenses as of Sept. 30.
The Globe spoke to Mr. Loeb recently about what he’s been buying and selling:
Name three stocks you’ve been buying.
Brookfield Corp. BN-T, one of the world’s largest alternative asset managers, is a stock we bought in April. It was one of the ‘Liberation Day’ sell-off gifts. It was on our watchlist, and we started buying shares at around $68.
It has a strong, diversified portfolio of inflation-protected private and public equity and debt assets through divisions such as Brookfield Asset Management Ltd. BAM-T and Brookfield Infrastructure Corp. BIPC-T (among others). Brookfield has recently been very active in building its insurance operations, which should provide it with inexpensive capital to invest without relying on outside sources. This model is very similar to Berkshire Hathaway Inc.’s BRK-B-N and is a crucial aspect of its success.
Brookfield is a cash-gushing machine with an exceptionally strong management team, particularly when it comes to capital allocation, and we want to own a piece of that. We think the stock could double from where we initially bought it.
Sagicor Financial Co. Ltd. SFC-T – a financial services company that offers products such as insurance and annuities in North America and the Caribbean – is a business we started buying about a year ago, in November, 2024 at about $6 a share. It’s a small-cap company with about a $1-billion market cap.
It’s relatively unknown because a big portion of the stock is held by insiders, which we tend to like. It means management has significant skin in the game. We also think it’s well managed. More than 85 per cent of its revenue comes primarily from life insurance, health insurance and annuities sold to individuals and groups – a business that’s not going away anytime soon. We think there is tremendous value with significant upside if the company can capitalize on potential synergies and increase penetration in the U.S. annuities market.
We’re not yield-focused investors; however, we like that it pays a healthy annual dividend with an attractive current yield of about 4.7 per cent. The company’s free cash flow more than covers the dividend. It’s a work-in-progress story. We are patient investors and expect our thesis to play out over several years – and we are happy to get paid while we wait.
Canadian Pacific Kansas City Ltd. CP-T is a stock we bought in April, 2023, for around $107 a share. As most Canadians know, it’s one of the country’s two dominant railroads. We tend to like oligopolistic industries.
The railroads are out of favour right now because of tariff threats and trade concerns; however, it’s a mission-critical industry with massive barriers to entry. We’re not replacing railroads in this country (or in the U.S.) anytime soon. They’re also becoming more important in terms of intercontinental trade between Canada, the U.S. and Mexico. It’s not a stock we expect to double soon, but it is somewhat misunderstood in today’s environment and is likely to continue growing while increasing capital distributions along the way.
We also own Canadian National Railway Co. CNR-T, but it’s a smaller position. We love the industry. It’s extremely resilient and has unique competitive advantages with limited competition. We believe railroads are core holdings that you can count on to protect and grow your capital over time.
Name one stock you sold recently.
Amphenol Corp. APH-N, which makes sensors and connector cables that transmit data between electronic components, is a business we originally bought in November, 2018, at an average cost of about US$25 a share. The stock has risen by about 90 per cent over the past year alone. It reached approximately 7.5 per cent of our portfolio, and we recently trimmed it back to about 5 per cent when it was trading at about US$112 a share.
We still love the company. It’s one of those pick-and-shovel types of businesses we are attracted to, but we decided to reduce our interest in Amphenol for risk-management purposes.
This interview has been edited and condensed.
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