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BIAS: Blue-chip dividend-paying stocks offer opportunities

Blue-chip dividend-paying stocks are the place to put your money right now according to a top Bermudian investment adviser.

Robert Pires, CEO of Bermuda Investment Advisory Services Ltd (BIAS), who was speaking at the company’s quarterly review at the Fairmont Hamilton Princess yesterday, told investors that stocks were undervalued compared to bonds and offered a better yield, adding that they also needed to take a more long-term approach with stocks that had potential for growth and to try to time the buying and selling to realise the best value on their investments.

Mr Pires said that BIAS strategy particularly over the past year had been to focus on the quality rather than quantity of the stocks it acquired, held or sold on.

He said that despite being in a secular bear market, there were a number of bull phases throughout its duration which presented opportunities to make a profit.

“In our view, when times are tough people spend less and when they spend they want to buy quality,” he said.

“What we have noticed over these difficult financial markets is that quality companies will likely fall in the bear phase of a bear market but go up during a bull phase.”

Mr Pires cited a variety of companies, including LVMH (Moët Hennessy Louis Vuitton), which has more than 50 luxury brands. He said BIAS had acquired a portion of shares at 114.40 Euros per share and had risen to 115.75 Euros over the space of about three months.

His next tip was Volkswagen, which owns Audi and Skoda, the former which is its premium brand and is particularly popular in the US and the Far East, and the latter which has taken off among the new middle class in the emerging markets, both of which he considers to be well-placed and to have strong pricing power and in combination cover all parts of the market along with the main Volkswagen brand.

The average price of BIAS’s share purchases was 98 Euros back in August and September and is now worth 116.40 Euros, up 17 percent in the space of two months.

Another prime investment, said Mr Pires, was Whole Foods Market, a supermarket chain that specialises in organic and premium food stuff, which had become popular especially with the Baby-boomer generation due to its fresh and wholesome products and the health benefits they offered to them as they grew older and wanted to take more care of themselves.

He said that the margin for supermarkets was on average two to three percent, but Whole Foods Market was in contrast 18 percent, while BIAS had seen a 12 percent rise in the value of its share acquisition in a couple of months.

McDonald’s was also an attractive proposition given its cheaper prices than Starbucks, from whom it had taken a significant market share, and new healthy menus, with BIAS buying in at $84.41 and the share price now up at $94.06, said Mr Pires.

In terms of steady performers, he said that Kraft was a good example, having yielded a dividend of three percent, while Cadburys was expected to grow further on plans to split into two entities a meat and cheese business and a snack side and expand into the emerging markets.

Apple was another safe bet, having revolutionised the way many people live and its share price continued to climb, said Mr Pires.

He said that the markets weren’t without their subject to volatility, which was expected to continue, but that investors had to ride them and take advantage of the opportunities where and when they arose.

“Equities are down in the third quarter, but as a result they are more attractive,” he said.

“What we are saying is still have a bond element in your portfolio because wealth preservation is important, but also make sure that you are making some money through investing in blue chip dividend paying stocks.”

Mr Pires had kicked-off the presentation earlier, making reference to the series of briefings which had started 10 years ago in the wake of the terrorist attacks of September 11, 2001 and the 20th anniversary of his company.

Among some of the key themes of this year and recent months he had been the Occupy Wall Street protests against corporate greed which had started in the US and spread worldwide, the impasse over the American budget between the Democratic and Republican parties, and the fall-out from the European debt crisis, most notably in Greece and Italy.

Dan Rivera, senior vice-president and portfolio manager at BIAS, gave some wider context within the performance of the global markets to highlight some of the opportunities afforded by stocks versus bonds.

Photo by Tamell Simons Seeking dividends: BIAS CEO Robert Pires speaks at the firm's quarterly review yesterday

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Published November 18, 2011 at 1:00 am (Updated November 18, 2011 at 8:08 am)

BIAS: Blue-chip dividend-paying stocks offer opportunities

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