Semiconductor and growth stocks have declined this year, bonds are underwater and even the S&P 500 is in a bear market. This is a challenging picture for many departments. So how should investors make up for such huge losses? Speaking to CNBC “Pro Talks,” Ford Asset Management’s Brian Arce said investors should sell any underperforming stock as soon as they realize they’ve made a “mistake” in their portfolio. “You have to look at each individual stock on its own,” said Arcee, which manages two funds that oversee more than $1.6 billion in assets. “If you don’t think the business model of some meme stocks like Gamestop or AMC is sustainable, then regardless of what happens in the near to medium term, you’re better off exiting and buying a company you believe in.” According to the portfolio manager, many investors remain in loss-making positions, taking “emotional pain” in the process. “I think it’s more practical than anything else.” He added that investors also “fear” losing out on the rebound rather than back down and reevaluate their own companies. Arsis said it would consider considering an underperforming stock if the company changes its executive team or prepares to revamp and change business. “But if nothing has really changed, it is very difficult to have complete confidence in [stock]Stock markets have been ruthless to investors of all stripes in 2022, be it hedge funds, billionaire family offices, or meme stock traders. Over 85% of hedge funds and billionaire investors lost an average of 18% in 2022 This year, according to CNBC Pro’s analysis of data from 271 funds from Investing.com. As seen in the table below, 232 funds lost value this year, with 11 funds losing more than 50% I. Cora Management and Spruce House Investment Management lost more than three-quarters of their assets by value, the latter taking a third of those losses in the past month. “The best investors in the world are probably 60-70% are right for the time being,” Arcee told CNBC, speaking from Singapore. “Which means that everyone, at least a third of the time, is investing in a company that doesn’t work for whatever reason. According to Arce, much of the pain can be avoided if investors only buy “quality” companies that have good management teams that offer good returns and solid returns. Does Radix chooses stocks The fund manager named three stocks that “would work in any type of economic environment”—UnitedHealth Group, Air Products and Freeport McMoran. Shares of all three companies are likely to be affected in the downturn, Arsace admits, but they are likely to outperform “deep cyclicals” such as semiconductors and the broader market. UnitedHealth, a US-headquartered health care and insurance company, has a buy-rating rating from 16 of the 19 analysts covering the stock since October 14. The average price target for analysts surveyed by FactSet is $597.5, indicating a 10.3% upside potential. current level. Air Products, an industrial chemicals company, is an inflation hedge and “incredibly defensive company,” according to Arsace. “They have increased their dividend for 40 consecutive years. They have contracted with their clients with inflation clauses which are 15 and 20 years long,” he said. Meanwhile, Freeport McMoran, a copper mining giant based in Arizona, is a “low-cost” producer of a commodity the world is running short of, according to the fund manager. “If you believe in energy transition, in green energy, the world doesn’t have enough copper to get us there,” he said. Six out of 12 analysts covering the stock rate FCX as a “buy” since its third-quarter results. Tracking primarily copper prices, the company’s shares are down 21% year-over-year.
