Gateway Investment, a low-volatility investing manager, cut stakes in Microsoft, Disney and Apple stock in the second quarter. It bought more shares of Monster Beverage.
Juan Ocampo/AEG/Microsoft Theater via Getty ImagesA manager that specializes in low-volatility investing made significant changes in U.S.-traded stocks in the second quarter.
Gateway Investment Advisers cut positions in Microsoft (ticker: MSFT), Walt Disney (DIS), and Apple stock (AAPL) in the quarter, and bought more Monster Beverage stock (MNST). It disclosed the trades, among others, in a form it filed with the Securities and Exchange Commission.
Gateway didn’t respond to a request for comment.
A few years ago, we profiled Gateway, and noted that the returns of the flagship Gateway fund (GATEX) trailed that of the S&P 500 index, a broad measure of the market. Yet it also exposed investors to less than half the volatility of the index, as measured by standard deviation. Those two attributes continued to hold through the end of the first quarter of this year. In fact, the net asset value of the fund, which uses an index options-based approach to reduce the volatility of long-only equity exposure, fell 10% in the volatile first quarter, half the plunge in the index. The fund now has total net assets of $7 billion.
Gateway sold 365,988 Microsoft shares in the second quarter, cutting its investment to 2,642,578 shares.
Microsoft stock surged 29% in the second quarter. In July through Friday’s close, shares have been flat.
As many U.S. office workers remain homebound, the software giant has been expanding features of its Teams software to compete with nimble rival Zoom Video Communications (ZM). We’ve noted that analysts are upbeat on Microsoft’s fiscal-fourth-quarter report, due after the market closes on July 22.
The manager sold 149,571 Disney shares, slashing its holdings to 688,580 shares of the media and entertainment company at the end of June.
Disney stock lost a third of its value in the first quarter, and although it rallied 15.4% in the second and is up 6.4% in July, shares remain 18% in the red for the year to date.
Disney has been reopening amusement parks on a limited basis. The debut of a filmed version of the popular musical “Hamilton” has given a boost to the Disney+ streaming platform. In addition, Goldman Sachs thinks Disney will be a winner in the streaming wars.
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Gateway lowered its Apple investment by 205,950 shares in the second quarter to end June with 1,467,993 shares.
Wall Street has been consistently bullish on Apple stock of late. The year-to-date rise in the iPhone maker’s shares has swelled to 31.2%, enough to push Apple stock into record territory.
Gateway bought 16,438 additional Monster Beverage shares in the second quarter, lifting its investment to 238,964 shares of the maker of energy drinks.
Monster Beverage stock surged 23.2% in the second quarter, wiping out a double-digit loss in the first. In July, shares have gained 7.1%.
We noted that an analyst thinks Monster Beverage stock could benefit from the introduction of a hard seltzer. In March, the company authorized a $500 million share-repurchase plan.
Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.
Write to Ed Lin at edward.lin@barrons.com and follow @BarronsEdLin.
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July 18, 2020 at 06:00PM
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A Low-Volatility Manager Sold Microsoft, Disney and Apple Stock. Here’s What It Bought. - Barron's
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