Alan Radlo, who began his new job yesterday as a fund manager at CI Investments Inc., said he is "cautiously optimistic" on North American stock markets this year.
"The environment is a little bit uncertain," said the 50-year-old star manager, formerly with Fidelity Investments Canada Ltd. "I think we haven't seen the last shoe drop in the United States with the banks."
The U.S. financial services industry has been in turmoil because of losses emanating from the collapse in the U.S. subprime mortgage market.
"I get very confused by the markets right now so I have to try to find companies that I think in this uncertain environment will continue to move forward and build value," he said in an interview.
Mr. Radlo, who looks for undervalued stocks, is running three portfolios for the fund arm of CI Financial Income Fund. They include Cambridge Canadian Equity, Cambridge Asset Allocation and Cambridge Global Equity. The veteran manager is targeting a 10-per-cent return on his Canadian equity fund.
While Canadian financial stocks have been taking a beating because of concerns about their potential exposure to the U.S. subprime mess, Mr. Radlo had no problem filling his funds with the stocks of Toronto-Dominion Bank and Manulife Financial Corp.
These companies have good fundamentals, appear to be inexpensive and "have stayed out of trouble," he said.
Business trusts with 7- to 9-per-cent yields - such as those in the pipeline business - are attractive, he said. He has seeded his funds with names like Keyera Facilities Income Fund, AltaGas Income Trust, Inter Pipeline Fund and Pembina Pipeline Income Fund.
Mr. Radlo said he also likes Churchill Corp., a diversified construction company that is an indirect play on the oil sands industry. He also likes suppliers to the U.S. aerospace sector such as Curtiss-Wright Corp. and Allegheny Industries.
While Mr. Radlo has been out of the game as a fund manager for the past year because of a non-compete clause, he said he never left the ballpark. "I was monitoring the markets, reading the papers and participating on conference calls," said the Boston-based manager.
Even though his new funds don't have a track record, analyst Peter Loach, managing director of fund research at BMO Nesbitt Burns Inc., still recommends them.
"Mr. Radlo is an exceptionally talented manger, has a proven rigorous discipline and is an active stock picker who is likely to outperform the index," Mr. Loach said.
Dan Hallett, an independent fund analyst, expects to recommend Mr. Radlo's Cambridge funds, but will refrain from doing so formally until he gets a better handle of the manager's new team and money starts flowing into the new funds.
Economics degree from Brandeis University and MBA from University of Massachusetts in Amherst, Mass.
Started Boston-based Fidelity Investments' Canadian subsidiary and ran its mutual funds from 1987 to 1990 before returning to the head office for a short stint there.
He returned to work for Fidelity Canadian Investments Ltd. in 1994 to "rejuvenate the company," until December, 2006. He oversaw $10-billion in assets at Fidelity's Canadian subsidiary. He ran the Fidelity Canadian Growth Company and co-managed the Fidelity NorthStar and Fidelity Canadian Asset Allocation Funds.
Prior to his career at Fidelity, he worked as an analyst and a portfolio manager of a small-capitalization growth fund at Bank of Boston.
© 2007 The Globe and Mail. All rights reserved.
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