Ask A Fund Manager
The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, Red Leaf Securities chief executive John Athanasiou explains how the entire western world is relying on the production from one particular ASX-listed company.
The ASX share for a comfortable night's sleep
The Motley Fool: If the market closed tomorrow for four years, which stock would you want to hold?
John Athanasiou: This one might be a little gutsy… But given its global strategic importance, I would hold Lynas Rare Earths Ltd (ASX: LYC).
It's the only significant producer of rare earth materials outside of China. Rare earth materials are required for all sorts of things that we consume on a daily basis — from electric cars, mobile phones to superconductors.
And the western world really wants a producer outside of China, so it enhances strategic importance. They announced recent record sales revenue of, I think, $202 million dollars. And that's despite supply chain [issues], which we think will be resolved fairly soon. So there's even more upside to them. So I think if you hold Lynas now, you'll be happy in four years' time.
MF: When did your team buy into it?
JA: We started buying about three or four months ago.
MF: Is there a move that you regret from the past? For example, a missed opportunity or buying an ASX stock at the wrong timing or price.
JA: Oh mate, where do we begin? We're just talking about investments, right!
What I regret the most is underestimating the pace and scale of how the share market recovered following the COVID-19-induced slump prior to March 2020.
I actually told my team and all my clients, this is the greatest opportunity since the GFC. But I was taken aback by the extent of it. That was so rare and fast. I think it caught a lot of people by surprise.
MF: It was almost like 2020 was five years crammed into one, wasn't it?
JA: Exactly. That's like a one-in-10-year event, so you don't want to miss those opportunities.
MF: After the market fall last month, do you feel like the current situation is going to be as dramatic as that?
JA: I don't think it'll be as dramatic.
There will be a bounce because markets traditionally do. But things were really scary back then, if you recall. They're not as scary now.
MF: The world knows more about the virus now, don't they?
JA: Correct. We were in uncharted waters. Last time a pandemic happened was 100 years ago.