BNN, Business Day: How ETFs are uncovering buys for active fund managers

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“We’ve got 5 star rated investing advice for uncovering value in the equity market.” David Barr was a guest on BNN’s Business Day and talked about how “money flows out of mutual funds and into ETFs that track major indexes are helping to uncover buying opportunities in stocks.”

bnn-oct-19-2016BNN: When you’re identifying these companies, what’s your timeline for holding them? I would think what’s challenging with what you’re doing is you’re very much fighting the trend.

DB: We love fighting the trend.

BNN: If the point is that these stocks are getting less attention because the market is going somewhere else, certainly it creates a value opportunity. What about if the volume never comes…because of what’s happening with the ETF trend?

DB: A lot of value investors will talk about “value traps” and how you get stuck in these things and how you can never get out and money never comes back to them. What we tend to focus on is growth companies, so if companies are servicing their customers really well, have great products, are building it out in big markets, investor interest will come back to them.

BNN: So will this exacerbate the trend if all the money is going to ETFs? This should be great for you…because there should be more valuation discount opportunities.

DB: It’s absolutely wonderful for us because the flows are going to continue into ETFs so money is going to come out of our sector. Being small and nimble, we can move around pretty well and take advantage of the opportunities.

Portfolio highlights include TIO Networks (TNC) and Quantum Corp (QTM)

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