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Believing is investing.
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Wall Street may be ready to give back Wednesday’s stock gains as fast as it earned them, judging by futures, as investors also wait for a European Central Bank meeting.
Investors have been on an up-and-down ride this year, with more volatility promised a U.S. election looms and COVID-19 hangs around. One way to get through it? Pick solid companies with solid returns and believe in their story. That is the message in our call of the day from Domini, one of Wall Street’s few female-led fund houses.
The Domini Impact Equity Fund DSEFX, +2.59% is in the top 1% of Morningstar’s one-year U.S. Fund Large Blend rankings, and 13% on a three-year ranking. Its top holdings, technology giants Apple AAPL, +3.98%, Amazon.com AMZN, +3.77% and Microsoft MSFT, +4.25% — thrived during the multiyear bull market and now amid the pandemic. Also included are video streamer Netflix NFLX, -1.34%, pharmaceutical giant Pfizer PFE, +0.69%, and newsy electric-car maker Tesla TSLA, +10.92%.
Domini’s founder and chair, Amy Domini, and chief executive officer Carole Laible, told MarketWatch their ethical fund wants to own companies with strong social and economic profiles and solution-oriented leaders. They are also turning into sound pandemic-era investments.
“We have a strategy that very deliberatively assesses human and planetary risks to investments. That strategy is a risk-avoidance strategy and in a time of tremendous stress, as coronavirus has put on our economic lives, risk avoidance becomes far more important,” Domini said.
For example, the fund owns companies that help individuals access education, finance and health care — telemedicine group Teladoc Health TDOC, +4.10% or online tutoring company Chegg CHGG, +3.04%. Both have become go-to companies this year in the pandemic.
The fund got its start in 1991, but had a strategy shift in 2018, so that is where they said the performance tracking should start.
Investors’ belief is crucial when it comes to one holding that they highlight, Tesla, which has been on a wild ride lately. The managers said they have trimmed some holdings as stocks have climbed, but that it remains a key holding. “Our thesis on Tesla in part is based on the ecosystem they create,” which is similar to Apple’s, said Domini.
“We see them as an ecosystem of next-generation fuel-saving, interconnected devices that all work to make the individual’s life simpler or cleaner. If we see a threat or change in direction to that we would probably seriously reconsider our interest in the company,” she said.
Beyond Meat BYND, +2.75% is another solid company for Domini. They make “food that is good for our planet, but also better for the people eating it than beef or meat. That’s a very compelling story for us,” said Laible. Aside from being a strong performer, Beyond Meat is at the heart of consumer demand for food right now — organic and natural, and it also meets the needs of vegetarians.
“We think that their innovation in the process and being that key leader in the space has really been beneficial to the overall market, and has been good to us in our portfolio,” said Laible. Healthy, sustainable foods fit into their investing mantra, so the company was “a very clear choice for us,” she added.
Finally, they highlighted DexCom DXCM, +3.20%, which develops glucose-monitoring technology: “When we bought it at the time, you still were required to do the finger prick…that was finally allowed to be discontinued.
“The thesis is that this remote monitoring in the hospital was five years off, but as the pandemic hit and they’re trying to cut down on the nurse going into the room with the patient to cut down the contact, all of a sudden it became a today story,” said Laible.
The markets
Dow YM00, -0.50%, S&P 500 ES00, -0.50% and Nasdaq-100 NQ00, -0.39% futures are tilting south. European stocks SXXP, -0.48% are mixed ahead of an ECB meeting, while Asian markets made solid gains. The dollar DXY, -0.21% is slipping, as analysts ponder whether recent gains will last.
The buzz
Initial jobless claims and continuing claims are ahead, along with producer prices.
A strong euro will likely be in focus when the ECB meets, with a press conference featuring President Christine Lagarde to follow.
Californian skies have been glowing orange, with wildfires raging across the Pacific Northwest.
Germany, a leading European pork producer, has confirmed a case of deadly African swine fever.
“We had to show calm.” President Donald Trump has defended comments in a book by journalist Bob Woodward that claim he played down COVID-19.
The chart
Jefferies analysts surveyed more than 5,000 consumers in 11 countries to gauge changes in behaviors due to COVID-19. The survey was last carried out in April.
The news isn’t great for airlines:
Jefferies
Or restaurants:
Jefferies
Random reads
Global wildlife populations are in free fall, thanks to humans.
U.S. stimulus checks are showing up in far-flung places.
