Perspectives
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Krawez Highlights Opportunities in Korea and Japan
March 22, 2024
Brian Krawez, president and lead portfolio manager of Scharf Investments, says that while he believes Korean stocks are “very, very cheap”, the ‘Korea discount’ could start to close with ongoing government reforms. Brian recently shared his thoughts on the opportunities we see in both Korea and Japan with Tanvir Gil on CNBC Asia’s “Street Signs.” While we see similarities in both markets in terms of growth—look at Toyota vs. Hyundai, for example—the valuations among Korean companies are very compelling at this time.
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Eric Lynch Addresses AI Winners and Losers
March 14, 2024
“We're at a kind of 'where's the beef?' moment for AI, where all the promises need to be delivered this year.” Eric Lynch, managing director at Scharf Investments, recently shared his thoughts on AI winners and losers with Andrew Ross Sorkin on CNBC’s “Squawk Box.” While the IT sector is seeing slower growth than expected, AI is moving the profit and revenue needle at Oracle. “Oracle is really guiding for 50% infrastructure cloud growth going forward, because its use case was really generative AI that it needed for its superior tech stack.”
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Lynch: Tech Hangover Outweighing AI Gains
March 14, 2024
There is a tech hangover that is outweighing AI gains. Case in point: Adobe (ADBE). Eric Lynch, managing director at Scharf Investments, appeared on Schwab Network’s “Morning Trade Live” program with Oliver Renick ahead of Adobe’s earnings report. “To date, what we’re seeing with regard to companies focused on AI is a separation of story and profits.” At Adobe, management guidance for 2024 called for 12% growth, which is pretty anemic given all of the hype around AI innovation.
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Brian Krawez Addresses Recession Risks
March 12, 2024
Brian Krawez shared his contrarian view on Reuters TV with regard to investor optimism regarding the outlook for the economy. He noted that recessions typically begin a year after the last Fed rate hike, which would put us at risk for a potential recession in the middle of 2024. With core inflation stuck around 4% and an inverted yield curve, he believes recession risks are still out there. Brian also shared his thoughts on where investors can find value in the market today, especially among “average stocks” within the S&P 500 where valuations are compelling and earnings guidance is strong.
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Lynch: Time to Pivot from Macro to Micro
March 11, 2024
“It looks like it’s time to pivot from the macro to the micro.” Eric Lynch, managing director at Scharf Investments, appeared on Reuters TV’s “Market Insight” program and shared his perspectives on the current market environment. With healthy jobs growth reports and the Fed feeling more comfortable that inflation is in check, the focus now turns to earnings season. Corporate earnings grew just 0.9% in 2023, despite an S&P 500 return of 26%. Guidance for Q1 growth has already been adjusted since January with more than 70 companies decreasing their guidance for Q1.
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Krawez: Revenge of the Average Stock
February 27, 2024
Brian Krawez appeared on Reuters TV and noted that while Mag 7 companies have driven much of the recent market performance, we could see the revenge of the average stock in 2024. The average stock underperformed the S&P 500 last year by almost 13%. The last time that occurred was in 1999 when the average stock went on to outperform the broader market over the next five years.