Likes/Dislikes - March 27, 2020

Below are Evergreen Gavekal's Likes/Dislikes for March 27, 2020.


Changes highlighted in bold.


  • Large-cap growth (focus on lower P/E issues within this style; i.e., “growth at a reasonable price”; because of this week’s powerful rally, pause for now)
  • Some international developed markets, especially Japan (Continue buying but slowly due to this week’s rally.)
  • Publicly-traded pipeline partnerships (MLPs and other mid-stream energy securities) yielding something approaching infinity (due to this sector’s utter collapse, we feel it is now appropriate to accelerate accumulation; however, distribution cuts are spreading due to the unprecedented collapse in energy demand)
  • Gold-mining stocks (despite a big up-move this week, most still look attractive)
  • Gold (also step up the pace of buying)
  • Silver (same as gold; silver has been hit even harder)
  • Select international blue chip oil stocks (because of a strong up-move this week, notwithstanding today, buy more slowly and selectively)
  • Short-term investment grade corporate bonds (1-2 year maturities)
  • Emerging market (EM) bonds in local currency
  • Large-cap value (buy more carefully now due to the aforementioned rally)
  • Copper producers (the damaging effect of the coronavirus on Copper demand could be high in the short term, but the fundamentals of Copper supply/demand remain attractive long term. Copper could also have a very sharp rally if fears are calmed)
  • High-dividend yield equities with safe distributions (as interest rates disappear, investors will go searching for yield)
  • Most cyclical resource-based stocks (again, buy more carefully but considerable long-term upside remains)
  • BB-rated corporate bonds (due to the dramatic spread-widening that we expected and has happened with a vengeance, we are bumping these up two notches but this is another “buy slowly” situation).
  • A wide range of high-income securities that have been crushed by the global margin call, including preferred stocks (many of these have surged so buy less aggressively)  
  • Canadian REITs (these, too, fall under the crushed category, though, again, there’s been a notable recovery)
  • Intermediate municipal bonds with strong credit ratings (both intermediate-term and long-term muni bonds have had big rallies; we are less enthusiastic, as a result)
  • Long-term municipal bonds
  • South Korean Equities (this market has been pounded, offering excellent long-term value but, they have also been strong performers this week; S. Korea is far ahead of the west in seeing its infection rate decline.)
  • Long-term investment grade corporate bonds (the Fed’s declared intention to buy corporate bonds has made these much less appealing though some bargain remain)
  • Solar Yield Cos (the leading entity in this sub-sector has been slammed along with nearly all yield plays and is once again attractive)


  • Small-cap value
  • Mid-cap value
  • Emerging stock markets; however, a number of Asian developing markets look undervalued
  • Intermediate-term investment-grade corporate bonds, yielding approximately 4%
  • US-based Real Estate Investment Trusts (REITs)
  • Cash
  • Long-term Treasury bonds
  • British pound currency
  • Canadian dollar-denominated short-term bonds
  • Japanese Yen
  • Small-cap growth
  • Mid-cap growth
  • Lower-rated junk bonds
  • Floating-rate bank debt (junk)
  • Intermediate-term Treasury bonds 
  • One- to two-year Treasury notes


  • European banks (these are ominously making new all-time lows)
  • Investment-grade floating rate corporate bonds (reducing exposure to these as Fed rate cuts are increasingly likely)
  • US dollar (The unprecedented size of the rescue package funded by debt is likely to put downward pressure on the dollar once this crisis passes)
  • Traditionally “safe” sectors such as Staples and Utilities due to elevated debt and valuation concerns
  • Many semi-conductor tech stocks which have surged in price over the last six months and generally trade at lofty prices despite falling earnings.

* Credit spreads are the difference between non-government bond interest rates and treasury yields.

(Note: based on the intense damage done to nearly all risk-assets lately, our negativity has eased even on the above “dislikes”)

DISCLOSURE: This material has been prepared or is distributed solely for informational purposes only and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Any opinions, recommendations, and assumptions included in this presentation are based upon current market conditions, reflect our judgment as of the date of this presentation, and are subject to change. Past performance is no guarantee of future results. All investments involve risk including the loss of principal. All material presented is compiled from sources believed to be reliable, but accuracy cannot be guaranteed and Evergreen makes no representation as to its accuracy or completeness. Securities highlighted or discussed in this communication are mentioned for illustrative purposes only and are not a recommendation for these securities. Evergreen actively manages client portfolios and securities discussed in this communication may or may not be held in such portfolios at any given time.

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