Larry Cordisco: What Growth Investors Should Focus On As Tech Stocks Pick Up

TL;DR

Larry Cordisco discusses the current market conditions, the investing methodology at Osterweis Capital Management, and provides insights on three stocks: Amazon, AMD, and Aptiv.

Transcript

okay hello everybody and welcome to investing with ibd sponsored by ontrack today is wednesday june 16th and on today's show we've got larry cordisco he is the co-cio of core equity at osterweiss capital management larry thanks so much for being here today thank you all right so really looking forward to you digging into your perspective on the mar... Read More

Key Insights

• ❓ The market's volatility and frequent rotations make it challenging for growth investors.
• 🍉 Osterweis Capital Management focuses on companies with competitive advantages, secular tailwinds, and long-term earnings growth.
• 💋 Patience and sticking to the investment process are crucial during challenging market conditions.
• 🧑‍💻 Inflation is expected to be transitory, with tech stocks and certain industries like transportation having favorable prospects.

Questions & Answers

Q: How has the market setup and volatility impacted growth investors?

The market setup and volatility have made it difficult for growth investors, with catch-up trades and rotations creating challenges. However, Cordisco believes that growth stocks will have their time in the sun again and advises investors to be patient and stick to their strategies.

Q: What metrics does Osterweis Capital Management focus on when screening stocks?

Osterweis Capital Management identifies industry leaders and highly disruptive companies, monitoring them for inflection points in growth rate or valuation compression. They focus on competitive advantages, long-term earnings growth, and entry points during periods of underperformance.

Q: How does inflation impact market conditions and areas of strength?

Cordisco believes that inflation is transitory, with an expected deceleration in inflation rates as supply chains normalize. He points out that sustained low interest rates and the scarcity of growth favor tech stocks. Additionally, he mentions that certain industries, like transportation, can hedge against inflation risks.

Q: What are the factors driving Osterweis Capital Management's investment decisions on Amazon, AMD, and Aptiv?

Osterweis Capital Management sees Amazon as having significant secular tailwinds in e-commerce and scaling digital advertising. AMD is expected to maintain its lead over Intel in the data center market, driving future growth. Aptiv benefits from the trends of advanced safety systems and electric vehicles, with a strong competitive advantage in the auto industry.

Summary & Key Takeaways

• Larry Cordisco discusses the setup in the market this year, highlighting the surprise moves in cyclically based companies and the catch-up trades that have played out. He also notes the struggle between inflation and growth as a reason for the market's volatility.

• He emphasizes the growth approach at Osterweis Capital Management, focusing on companies with competitive advantages, secular tailwinds, and long-term earnings growth. They analyze the valuation and entry points for investment decisions.

• Cordisco advises growth investors to be patient and stick to their process during the current challenging market conditions.