Mayberry scouts bargain stocks, eyes tourism return - Stockbroker’s CEO says it is a great time to invest
Despite taking a nearly $1 billion-beating earlier this year on its large and diversified equities portfolio from the economic downturn caused by the COVID-19 pandemic, stockbroker, investment manager and financial advisory house, Mayberry Investments Limited, is said to be on the lookout for good stocks to buy. Its CEO, Gary Peart, is also talking up the economic recovery, even in tourism, that is predicated on the successful roll-out of COVID-19 vaccination.
Noting that Mayberry’s strong cash position has put it in good stead to withstand the COVID shock, Peart is urging existing and potential investors to get in the market for stocks, real estate and other opportunities that abound, declaring that it is a great time to invest
“We are actually well poised to take advantage of opportunities out there in the marketplace. One of the transactions: recently we have started to take a position in GraceKennedy. We think GraceKennedy seems to have cracked the code in terms of their overseas expansion, their revenue is growing at double digits and their profits are doing very well,” the stockbroker told the Financial Gleaner in an interview.
Speaking to the company’s investment strength, Peart said the economic impact on the business must be seen in the context of the broader economy and the overall contraction in the equities market.
“We made a profit of $300 million in Q3. The hit that we took was in the first quarter. The stock market fell by some 30-odd per cent because of COVID. As a mature financial services company that has been around for more than 35 years, we have developed quite a bit of shareholders equity or capital and it allows us to weather storms like this,” he explains.
As the market pulls back, he points to Mayberry’s $10 billion of equity as an important buffer in these times, that enables it to carry on executing investment decisions.
“The amount of cash that we have available to invest is actually two to three times the cash we had available to invest last year this time.” according to Peart.
Noting that the continuing bear market run is an investor’s dream, the stockbroker is encouraging investors to get active in the market now when bargains abound.
“We find that some investors tend to buy stocks when they are going up, when you really should be buying it on the way down,” he offers basic investment advice.
While not yet taking an aggressive stance on acquisitions in the market, Peart says that will come soon.
“We think that the market is close to bottom,” he adds, suggesting that Mayberry will adopt a more acquisitive stance when the market bottoms out.
He is not worried about exiting some equities to free up cash for investment in what are considered better picks. In the current market, Peart says the Mayberry team is “pretty excited.”
He explains: “We have cash and there are a lot of shares that are depressed. We are picking, choosing and refusing which ones to go into. We are pretty disciplined investors. Once we think we have made a reasonable return on some of the assets that we have in the equity portfolio, we have no problem selling, taking that profit and going into other stocks. It actually allows other people to benefit if that stock that I am selling allows them to get some more upside. I might think something else is growing faster. It is not necessarily that what I am selling is bad,” he outlines.
According to the Mayberry CEO, while subsidiary Mayberry Jamaica Equities Limited has seen some impairment from plunging stock values and a falloff in commissions as market activities has slowed, other areas of the business continue to do well. Mayberry’s profits suffered a near $1 billion reduction so far this year from the economic downturn but rebounded to post $332 million to its bottom line for the third quarter to September.
“The cash-generation side of the business has done pretty well. That’s our trading side, our investment banking, and based on what we see, we have a robust pipeline for 2021,” he reports.
The investment banking area of the business, Peart says, also continues to assist clients to restructure debt, including rolling over bonds that fall due during the recession.
He is also highlighting the importance of capital adequacy for businesses to survive shocks such as COVID.
“One of the first things you want to establish is: Do they have enough cash to get through? Once you have enough cash to get through the period you don’t have to worry about bankruptcy or insolvency,” he suggests.
He says both the Bank of Jamaica and the Financial Services Commission, as financial sector regulators, have been correct to have adopted a more vigilant supervisory stance in relation to capital adequacy.
Peart is upbeat about what he says are green shoots which are beginning to appear in the economy, among them a slow return of tourists to the hotel sector, which should be significantly accelerated by a successful COVID vaccine roll-out in the major markets as well as in Jamaica. He notes that some savvy investors continue to advance plans for investment in resort real estate and room construction. Mayberry owns several real estate investments, which Peart did not elaborate on.