Hexavest, a Montreal-based investment manager partially owned by Eaton Vance, features a choice quote from Vital Proulx, its co-chief investment officer, on its website: “A good dose of contrarian opinion helps us avoid the traps occasionally set by the comfort of consensus.”
Buying Boeing stock (ticker: BA) in the fourth quarter in the face of negative headlines about the company was certainly a contrarian move. Hexavest more than doubled its investment in the embattled aerospace giant. The firm also bought up Home Depot (HD), Intel (INTC), and Walmart stock (WMT) in the quarter.
Hexavest, which managed $8.2 billion in U.S.-traded equities as of Dec. 31, disclosed the investment changes, among others, in a filing with the Securities and Exchange Commission. It didn’t respond to a request to comment on its stock trades. The firm is 49% owned by Eaton Vance (EV).
Hexavest’s contrarian take hasn’t paid off in recent years. The firm’s composite U.S. equities strategy had generated returns of 15.65% in Canadian dollars for 2019 through Nov. 30 compared with 24.12% in the S&P 500. The three-year annualized return to that point was 9.88% for Hexavest compared with 14.41% in the S&P 500.
The team that formed Hexavest in 2004 has worked together managing money since at least May 1, 1991. The annual return since then is 10.47%, nearly even with the index’s 10.51%.
So far in 2020 year to date, only one of the four fourth-quarter stock purchases mentioned above is beating the S&P 500’s 3.1% advance,
Boeing stock has slipped 0.5% so far this year through Friday’s close. That may be surprising, considering that there has been a steady stream of negative headlines, including a story in The Wall Street Journal last week that noted employees had joked about the safety of its planes. Also last week, a Boeing plane was shot down, by mistake, by Iran,
Hexavest bought 113,858 Boeing shares in the fourth quarter, raising its investment to 193,582 shares.
The investment firm also bought 425,862 additional Home Depot shares in the period. Hexavest only owned 50 Home Depot shares on Sept. 30.
The home-improvement retailer reported disappointing third-quarter revenue in November, sending the stock tumbling. In December, management reduced its forecast for 2020 sales. Home Depot stock was hobbled but still ended 2019 with a 27% gain, behind the S&P 500’s 28.9% rise. At least one analyst in December thought in December that Home Depot stock presented a good buying opportunity.
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Home Depot stock is sporting a 6.2% gain for 2020 so far.
A strong third-quarter earnings report lifted Intel stock in October, putting shares on a path for a 27.5% gain by the end of the year. Shares of the chip giant have slipped 0.4% so far this year, after a preview of its Tiger Lake laptop processors didn’t spark a rally.
Hexavest bought 309,048 Intel shares in the fourth quarter to end the year with 1.85 million shares.
The investment firm bought 123,938 Walmart shares in the quarter, lifting its investment in the retailing giant to 548,281 shares.
Walmart stock rose 27.6% in 2019, but it has slipped 3.3% so far in 2020. Late in December, Walmart lost a top e-commerce executive to Michaels (MIK).
Media reports have said Grubhub (GRUB), the food-delivery company, is for sale (although the company denies it). Walmart is reportedly an interested buyer.
Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.
Write to Ed Lin at edward.lin@barrons.com and follow @BarronsEdLin.
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