and receivers aimed to do. Once that became clear, it was time for step two. The Yale University graduate with a bachelor’s in economics would use his keen reflexes to swoop into position for the focal point of the play. Only then did he get to uncoil and tackle an opposing player, block a pass, or make a game-changing interception.
That same patience and analysis are being applied to the world of finance as the 44-year-old searches through data for signs that the downturn is ending. “U.S. companies are going to lead the global economy out of the recession, especially as they benefit from a weak dollar to boost foreign sales,â€ Profit said last November. “We’ll be looking to see if foreign sales are up and if companies are keeping their margins intact even as commodity prices come down. That may be a signal that we’ve turned the corner.â€
When times are hard, competitive pressure in the financial services space grows even more intense as large and small players vie for investment capital, the lifeblood of these businesses. “We’re in a business where you have to continually prove yourself and where everyone is conscious of your latest results,â€ says Profit. “I think we’ve proven our abilities long term and hopefully that comes across to long-term investors and new accounts.â€
GRINDING IT OUT
Profit didn’t shy away from the turmoil of 2008. For a time, he even navigated the whirlpool that was financial industry stocks. While he exited the sector almost entirely starting in early 2007, at year-end he saw an opportunity to drop anchor on two of the banking sector’s stalwarts, Wells Fargo and J.P. Morgan. The move was just in time to benefit from a financial stock rally last spring. “We run a diversified portfolio, and our analysis indicated that the sector had the potential to be positive at some point in 2008,â€ he recalls. “We wanted to be careful, and the decision was made that we would get into large, diversified banks that had minimal exposure to mortgage-backed securities. Those two banks fit the description.â€
While Profit thinks there’s still rough trekking ahead for the market in 2009, he’s keeping an eye out for opportunities in two favorite sectors, technology and healthcare. He believes both will be primed for appreciation once the economy stabilizes. “Prices have come down on the best names in both groups, but we haven’t seen erosions in market share for companies we like.â€ He includes Apple on that list. “The stock has come down dramatically, but the stores are full and products like the iPhone or iPod are still popular.â€ Cisco Systems is another example. “The company’s products are still in demand. It’s an infrastructure play that should do well when the economy comes out of the doldrums.â€
The money manager says the fundamentals behind healthcare are still in place. “Healthcare is demographics, the aging of the population. Demand’s not going anywhere–the stocks are cheap, and many pay a high dividend yield,â€ he says. That reasoning has guided Profit