Last week, Doctor Leber, the founder of ACATIS organized a conference call in Germany to talk about the coronavirus crisis we are facing, and I would like to share with you some ideas and convictions he brought to the debate.
First, we can ask ourselves what can we expect in this mostly unpredictable crisis? Well, we probably can expect the financial markets to experience even more volatility and Doctor Leber thinks we need to wait until early April when the wave will hit the US to see the worst of it.
Second, what kind of interpretation can we give to this huge drawdown? Doctor Leber thinks that the financial markets overstate the economic impact. In fact, he says that even if the damage may be of 5%, the stock decline went a lot further with more than 30%.
Well, then, what can we do as asset managers?
At ACATIS, we are value managers and as Doctor Leber said, “we are in hunting fever”. We can and will see the assets moving from the economic weak, the indebted to the economic strong, the debt free and the overcautious. If you take the example of the hotels or airline companies, if they go bankrupt, the hotels and the planes still remain. They only change hands. We are also interested in the companies which could benefit from this epidemic like some pharmaceutical ones. And, the best for us as value investors, are the companies that were unjustly punished and that we have always wanted to have. Those companies that are driven into the crisis and will turn out to be winners.
As Doctor Leber concluded: “Great fortunes are made in crisis!”