The US equity market has confidence that Donald Trump can help the economy, but a Citywire + rated manager believes Trump may lack the skills to run the country.
Daniel O’Keefe, who manages the Artisan Global Value fund, told Citywire Selector that running a business empire is different to managing a political party. While Trump had promised reforms in his campaign, so far little legislation had been implemented.
‘We have this idea that because a business person has operated effectively she can go in to this lazy inefficient behemoth and her executive experience will result in effectiveness. But the reality is that in the business world we operate on analysis and we operate on people following orders. The government doesn’t work that way,’ O’Keefe said.
‘It is very messy, it is very complicated and it involves compromise. It involves all these uniquely political skills. Donald Trump has not demonstrated those skills in his career. Just because he was supposedly a good executive, will he be a good president? It is a very different skill set. I think unfortunately in the first seven months of the administration we are seeing that lack of political skill.’
O’Keefe, who co-manages the fund with David Samra, holds 51.4% of the fund in the US and it is the largest country allocation. He said that the US equity market has risen in the hope that Trump would deregulate the economy more than the previous president.
‘After the US elections, stocks went right up. People were very enthusiastic about the election of Trump with the belief that the economy would perform better under his administration as a result of him being more of a friend to capitalism than Barak Obama.’
Stocking up on Samsung
Away from the US, O’Keefe’s largest stock holding is the electronics company Samsung at 5% of the fund. The value investor said that despite the firm’s problems with one of its phones, the semiconductor business was doing well and the stock was still cheap.
‘How is it that you can have your vice chairman go to prison, one of your big product lines be recalled? There has been a lot of pain that the company has gone through but, you went into it with a very low multiple and it is still cheap. The earnings growth of the company continues to exceed the appreciation of the stock price and so the multiple continues to be very attractive.’
Over three years to the end of June 2017 the Artisan Global Value fund returned 17.77% in US dollar terms. This compares to a rise of 23.96% by its Citywire-assigned benchmark the LCI S&P 500/MSCI World (50:50) over the same time frame.