Finding Opportunity

Asset Management, Companies and Industries, Investment Themes, The Economy July 21, 2020

Finding Opportunity

In the wake of the first quarter market decline, we found opportunities to add companies to our client portfolios and take advantage of a tax loss for taxable accounts. We purchased a position in DocuSign (tkr: DOCU) early in the quarter. The stock has outperformed dramatically since then, nearly doubling our initial position. DocuSign provides cloud-based electronic signature solutions, enabling companies and individuals to sign documents remotely, securely collect information, and automate data workflows. The adoption of electronic document execution has accelerated due to the pandemic and we anticipate that this will continue to benefit DocuSign even as things begin to return to normal.

Where we were able to realize a tax loss for the benefit of our clients, we sold the iShares S&P SmallCap 600 Index (tkr: IJR) and replaced it with the Vanguard Small-Cap Index Fund (tkr: VB). These two ETFs have similar exposure, though the Vanguard ETF expense ratio is slightly lower at 0.05% compared to the iShares ETF 0.07% expense ratio.

We took advantage of the excessive decline the price of Ventas (tkr: VTR) to add to our existing position. Ventas is a real estate investment trust (REIT) that owns a portfolio of senior housing, medical office buildings, life science buildings and hospitals. From its peak in February, Ventas had declined 73% by mid-March. Though Ventas has significant exposure to senior housing facilities, which have been hit hard by COVID-19, our initial investment theme that the aging baby boomer demographic is growing still holds true. Over the longer term, Ventas should benefit from a decline in senior housing construction which should help offset the oversupply of senior housing facilities, ultimately leading to superior occupancy rates and a stronger recovery.

In the healthcare sector, we added a position in Thermo Fisher Scientific Inc. (tkr: TMO). Thermo develops and manufactures scientific instruments and laboratory equipment, diagnostics consumables, and life science reagents. It also provides software and services for research, analysis, discovery, and diagnostics. Thermo aspires to become a one-stop shop for researchers in academia, Big Pharma, biotech, and government. Demand for its tools and supplies are higher than ever as the world attempts to manage and eradicate the COVID-19 outbreaks. Looking ahead, Thermo is well-positioned to benefit from a rise in infectious disease and epidemiologic research over the next several years.


Individual investment positions detailed in this post should not be construed as a recommendation to purchase or sell the security. Past performance is not necessarily a guide to future performance. There are risks involved in investing, including possible loss of principal. This information is provided for informational purposes only and does not constitute a recommendation for any investment strategy, security or product described herein. Employees and/or owners of Nelson Roberts Investment Advisors, LLC may have a position securities mentioned in this post. Please contact us for a complete list of portfolio holdings. For additional information please contact us at 650-322-4000.

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