Share markets have been on a stomach-churning ride the past few weeks and many rookie investors will be experiencing losses for the first time after a boom 2020.
“It’s been pretty violent,” said Forager Funds portfolio manager Harvey Migotti.
“We certainly saw quite a bit of complacency developing in the market, a lot of retail investors investing in businesses that sound sexy on paper, whether it’s renewables or EVs or whatever else.”
“You needed this correction. I’m actually really happy for it because you had a bit of a rise in rates, a bit of a rotation into some of the beaten up sectors to come to more normalised valuations,” he said.
“I think it’s been healthy. The market was acting a bit unhealthy for my liking and this has been good.”
For those first-timers, Migotti reminded them volatility is a golden opportunity.
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Migotti said that Forager had entered this period with “a good pile of cash” and recently bought into two undisclosed stocks.
“We love that volatility because it allows us to buy really good high quality assets at a discounted price. Both of these happen to be in the growth bucket.”
He felt both purchases, which his team had been monitoring for months, have a decent chance of becoming a “free kick”.
“Names that have fallen 40% from the highs, for no particular fundamental reason just to kind of get caught up in the rotation and, and various other things,” he said.
“It’s been great from that perspective.”
25% of portfolio was bought since January
Migotti revealed that a quarter of his fund’s holdings had been purchased since January.
“It’s exciting and I’m excited as ever about the potential here,” he said.
“I think the rotation has been great. It’s a good time to both invest in us and buy parts of the market that have pared back. There’s always opportunities, is what I’d say.”
Forager chief investment officer Steve Johnson wished the party would last a bit longer.
“You get the price falls and often you get a lot of liquidity that comes with that as people start to run for the exits,” he said.
“To be honest, we hope the volatility continues over the coming months and years.”