The investor known for running the world’s largest technology fund during the dotcom boom is refreshing his call for investors to keep their portfolios light on the tech sector.
Sloy, Dahl & Holst chief investment officer Paul Meeks sees near-term trouble approaching based on frothy stock prices.
“Because they’re so volatile high beta [risk] stocks, when they correct they don’t just go down 2 percent. They go down 20 percent,” he said Friday on Empire Media in an interview this week. “It could happen at any time.”
His latest call comes as Wall Street celebrates the Nasdaq’s rebound to all-time highs. Since the February correction lows, the index has soared more than 7 percent.
“Valuations are extended for some of the names, and everybody’s favorite names particularly the FANGs,” said Meeks, referring to the widely-held group of tech stocks: Facebook, Amazon, Netflix and Google [the holding company of Alphabet].
But that doesn’t mean the former Merrill Lynch portfolio manager is abandoning his positions. Meeks, who owns Apple shares and has broad exposure to tech stocks, contended the backdrop is strong.
“I’ve been covering the tech sector for a very long time, and I can say in my heart of hearts that the fundamentals relative to the other 10 sectors in the S&P 500 are as good as they’ve ever been,” he noted. “Fundamentally I like it — particularly certain themes for tech spending within the sector.”
A tech swoon would be a major buying opportunity for Meeks, who’s putting together a list. He says he’s planning to pounce if there’s a 10 to 20 percent downdraft, because once it winds down, the Nasdaq could still see a strong year.
Facebook is a FANG stock making his list, as well as some semiconductors.
“Advanced Micro Devices today [Friday] is down 2 or 3 percent when the market is raging. Same thing with Micron. I think some of the semiconductors have fallen and they haven’t gotten back up,” Meeks said. “But I think they’re some good opportunities.”