Shares to buy, hold and sell - Alison Hyde
Hyde bought US telecoms provider CenturyLink back in June. It boasts a yield of around 7%, which she admits is "unusual" in a sector not usually known for its dividends.
"CenturyLink is predominantly exposed to the US market, which, despite recent setbacks, is still exhibiting the strongest economic recovery among Western mature markets, ticking along with an expected GDP growth of 1.9% for this year," she says.
Importantly, the company doesn't have much exposure to Europe, and the only exposure it does have is through the acquisition of cloud computing firm Savvis that CenturyLink made last year. She likes the cloud computing theme, where data is stored on internet servers rather than a local server - which Savvis is a play on.
Hyde bought the stock as a defensive move in response to "increasingly negative news flow" from the technology sector, surrounding earnings downgrades and the "expectation the semiconductor sub-sector would underperform". She bought the stock at $37.70 and it is now trading at more than $40 (as at 7 August).
Hyde has held Apple for four years, after buying it at around $130 a share. She has added to her position several times since, and it is now trading at more than $600 a share.
Apple is the world's largest stock by market cap and is "cheap on valuation metrics", she says - it trades at a price/earnings ratio of about 14, which is "attractive, especially if you strip Apple's cash reserves of $117 billion (£75 billion) out of the equation".
The fund does not have any restrictions in terms of market cap, but in the current environment, Hyde says it is weighted towards mid and large-cap stocks.
Some people may argue that Apple is overvalued, but Hyde argues that the company holds an "innovative and technological edge over its rivals". "This is especially the case in the smartphone and tablet arenas, which are themselves high-growth markets," says Hyde.
She adds: "The company has a very strong product cycle in front of it, with a new iPhone and mini iPad expected (though neither have been officially announced) later this year. Meanwhile, the new iPad has been doing very well in terms of sales.
Apple has a proven ability to handle its product pipelines well, keeping previous versions of products on the market for a time so as to be able to compete in multiple price ranges."
SELL: MICRON TECHNOLOGY
Micron makes semiconductor devices, which are then used in specialised technology.
Hyde admits that she sold the stock in July, not because of its individual attributes but because she has recently been reducing the fund's exposure to semiconductor companies, and Micron was particularly volatile.
She bought Micron for $7.55 per share in late 2009, and sold the stock at about $6. It is now hovering around the $6.50 mark.
"As with CenturyLink, this is in part a defensive move in reaction to a stream of particularly negative news from the sector and a weak macroeconomic environment," she says. "There is weakness in its order books and growth estimates have been revised down across the sector."
Intel, a fellow semiconductor chip-maker, recently cut its growth projections for 2012, following other cuts in the sector. "There are bigger factors at play too: the semiconductor sub-sector's exposure to the PC market is being hurt by the fact that people are tending to do less on their PCs and more on their tablets and phones than before.
As such there is a certain softness in demand; people are delaying upgrades, all the more so given the uncertain economic environment."
However, the semiconductor sector does have some growth potential in the mid to long term, Hyde says, but she is being cautious ahead of "what is likely to be a tricky earnings season". "When the fallout settles there may well be some good opportunities to increase exposure again," she adds.
The general term for the rate of income from an investment expressed as an annual percentage and based on its current market value. For example, if a corporate bond or gilt originally sold at £100 par value with a coupon of 10% is bought for £100 then the coupon and the yield are the same at 10%, or £10. But if an investor buys the bond for £125, its coupon is still 10% (or £10) and the investor receives £10 but as the investor bought the bond for £125 (not £100) the yield on the investment is 8%.
A catch-all phrase that can range from assessing the price of a property or vehicle before offering it for sale or the net worth of assets in an investment portfolio to the prices of shares on a stock exchange.
The total money value of all the finished goods and services produced in an economy in one year. It includes all consumer and government consumption, government spending and borrowing, investments and exports (minus imports) and is taken as a guide to a nation’s economic health and financial well being. However, some economists feel GDP is inaccurate because it fails to measure the changes in a nation's standard of living, unpaid labour, savings and inflationary price changes (such as housing booms and stockmarket increases).