NEW YORK (Reuters) - Don’t look for U.S. money managers to mark the Barack Obama election celebration with big portfolio shifts.
After all, even after Obama’s historic landslide victory over Republican John McCain on Tuesday, stocks still look cheap following the relentless pounding they’ve endured and the economy is still headed into a recession.
As a result, many investors have done little or nothing to alter their strategies, despite bountiful talk of Obama plays such as overweighting solar stocks and avoiding pharmaceuticals.
“We have not specifically tried to make an Obama play,” said Chris Orndorff, who helps oversee $50 billion in assets as managing principal at Payden & Rygel Investment Management in Los Angeles. “We recently began adding to our stock allocations because we believe we’ve hit bottom in the markets.”
Other managers also haven’t based their investment decisions on an Obama win.
Doug Kass, founder and president of hedge fund Seabreeze Partners Management, said Tuesday’s 300-plus point rise was an “Obama bounce, not an Obama rally. I think that all we are going to see is what we’ve basically seen now.”
Kass said the economic fundamentals are deteriorating, giving him reason to keep selling stocks short.
“My plan is to expand my short book,” Kass told Reuters in a telephone interview late Tuesday. “It’s growing clear that the recession is going to have a shelf life unlike the last recessions in both scope and duration.”
But not all Obama sector winners and losers should be thrown out.
Tuesday saw U.S. stocks stage their biggest Election Day rally ever, with noticeable moves in solar-related stocks, which benefit under an Obama victory as solar energy is one piece of his policy attempting to wean the country from its dependency on oil.
The Claymore global solar energy exchange-traded fund jumped 13 percent. First Solar rose $15.61, or 9.64 percent, to $177.52, while Evergreen Solar heated up $0.60, or 12.79 percent, to $5.29.
Tom Sowanick, the chief investment officer for $22 billion in assets at Clearbrook Financial LLC in Princeton, New Jersey, said solar stocks had been oversold and short-covering could be helping with these stocks’ rise.
Overall, equities looked due for a bounce, even an Obama one.
“The stock market is cheap and short-covering came in with the Standard & Poor’s 500 above 992,” Sowanick added.
Kass said the rise in equities will be short-lived. “Given the destruction in household wealth and stock prices, coupled with the swift drop in commodities on reduced demand, how can anyone be certain that you can sustain an Obama bounce?” Kass added.
All told, money managers say it is too soon to make any major changes in their portfolios based on the election.
“One of the things that is being tossed around is an idea by a congressman to get rid of 401k plans and replace them with a new better social security,” said Orndorff. “If something like that were to go through, obviously the big mutual fund companies that have a presence in this like T. Rowe Price, for example, I would be selling those stocks as quickly as I could!”
“But then again, this is all just a proposal by a congressman -- it is just too soon to move on anything,” Orndorff added.
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