Credit issues driving growth styles
Ongoing issues in the credit market are “likely to be supportive of growth stocks”, according to Mark Baribeau, investment manager of US-based fund manger Loomis Sayles and Company.
On a visit to Sydney-based Apostle Asset Management, which distributes the Loomis Sayles Global Growth Strategy in Australia, Baribeau said the “end to easy credit would continue the shift to growth (investment styles) away from value styles”.
“It’s time to focus on companies with strong competitive positions, great products that are selling across many markets and gaining share, strong revenue and earnings growth, superior returns on capital and relatively low levels of debt financing.”
Baribeau said in the past, low interest rates and easy credit had allowed many companies to mask their true fundamental prospects.
“While private equity buyers were able to borrow easily to fund their buying sprees, there was a floor under the valuations of many companies, and this floor has now been removed.”
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