Inside Peter Boockvar’s Playbook | Trade Ideas | Real Vision™

TL;DR

Peter Boockvar, CIO of Bleakley Advisory Group, discusses his successful trades in HCP, Mosaic, Crown Holdings, and his bearish stance on European and Japanese bonds in 2018.

Transcript

Welcome to Real Vision's Trade Ideas. Today we're sitting down with Peter Boockvar, CIO of Bleakley Advisory Group. Thanks so much for joining us. Great to be here, Justine. Thanks. And so now we're ending 2018, so let's take stock of some of the trades that you've made for the year, get some updates. You made five major trades. The first one that ... Read More

Key Insights

• 🤩 Aging demographics and cheap valuation were key factors in the successful HCP trade.
• 🦄 The shift to corn and the balance between supply and demand in fertilizers contributed to the Mosaic trade.
• ❓ Crown Holdings' dominance in the packaging industry, cheap valuation, and deleveraging efforts make it an attractive investment.
• 🏯 The Bank of Japan's yield curve control and the European Central Bank's reduced dominance in the bond market pose dangers for European and Japanese bonds.
• 👋 The Vanguard international ETF is a good hedge in the current bond market environment.
• 💵 Bullish on emerging market sovereign bonds denominated in local currencies, partially due to central bank responses and potential weakness in the dollar.

Questions & Answers

Q: Why does Peter Boockvar recommend holding onto the HCP trade?

Boockvar sees long-term potential in HCP due to the fundamental story of aging demographics and the demand for housing and outpatient facilities. He also finds the management and operations of the company to be satisfactory.

Q: What is the rationale behind the trade in Mosaic?

Boockvar focuses on the supply side story in the fertilizer industry, predicting a more equilibrium pricing in raw materials produced by Mosaic. He believes the shift to corn, a more fertilizer-intensive crop, will increase demand for fertilizers, making the trade still attractive.

Q: What attracted Boockvar to Crown Holdings?

Boockvar was attracted to Crown Holdings due to its dominance in the packaging industry and its cheap valuation. He also notes the company's deleveraging efforts and high free cash flow yield as positive factors.

Q: Why is Boockvar bearish on European and Japanese bonds?

Boockvar's bearish stance on these bonds is based on the Bank of Japan's yield curve control and the European Central Bank's reduced dominance in the market. He believes these factors, combined with negative interest rates and potential economic slowdown, pose dangers for bond investors.

Q: Why does Boockvar recommend holding onto the Vanguard international ETF for European and Japanese bonds?

Boockvar believes the ETF captures any dislocations in these bond markets and provides a good hedge. He sees a favorable risk-reward ratio in the ETF, particularly as the Fed potentially finishes raising interest rates and the dollar weakens.

Summary & Key Takeaways

• Boockvar's trade in HCP, based on the aging demographics and cheap valuation, was a big winner, but he still recommends holding onto it for the long-term.

• The Mosaic trade, focused on the supply side story in the fertilizer industry, has room to grow as the agriculture sector remains attractive.

• Crown Holdings, a packaging company, attracts Boockvar due to its dominance in the food and beverage industry and cheap valuation, and he expects a sharp rally in the stock.

• Boockvar's bearish stance on European and Japanese bonds is based on the Bank of Japan's yield curve control and the European Central Bank's reduced dominance in the market. He recommends holding onto the Vanguard international ETF, as central banks may lose control, leading to potential damage in the bond market.

• Boockvar is bullish on emerging markets, particularly sovereign bonds denominated in local currencies, due to central bank responses, potential weakness in the dollar, and the oil market plunge.