As head of U.S. equities for Natcan Investment Management Inc. in Toronto, Bill Onslow likes to "hold and roll" with truly great companies. "It's more an opportunistic type of approach," says Onslow, "mainly turnover based on valuation, not names, either reducing or adding weight during market fluctuations. For example, I've owned State Street Corp. ( STT/NYSE) since 1981, and Harley Davidson Inc. ( HDI/NYSE) since about 1990. Their opportunities are still very exciting."
A Natcan vice-president who is responsible for about $1 billion in assets, Onslow has been lead manager of the $74-millionAltamira U.S. Larger Company since he joined Altamira Management Ltd., a predecessor firm, nearly six years ago. He also managesAltamira Health Sciences,Altamira Biotechnology andAltamira Global 20. Using a "very sector-focused style," Onslow combines macroeconomic and company-specific input from in-house sector specialists: "Overall, a GARP [growth at a reasonable price] style for want of a better word," he says. He believes health care, science and technology and financials will be important market drivers in the U.S. market. Health care, in particular, is the sector he says has the best chance of outperforming over the next five to 10 years.
For that reason, the "forward-looking" Altamira U.S. Larger Company of 55 holdings is characteristically overweight in health care. Currently it holds about 18% in the sector, compared with 15% for the market benchmark. Information technology, the largest absolute weight, makes up more than 23% of the U.S. equity portfolio, and financials close to 20%.
There is some common ground between Onslow's large-cap picks for the U.S. equity fund and those he holds in his specialty portfolios. Large-cap pharmaceutical companies, predominantly U.S.-based, currently make up 55% of the 40 holdings in the health care fund and 32% of the 32 stocks in the biotechnology portfolio.
Onslow has been either lead manager or a co-manager of Altamira's health care portfolios since their inception, and most recently again assumed the lead role in January of this year. He was involved in the creation of the $67-million Altamira Health Sciences in July 1999, and the $15-million Altamira Biotechnology in September 2000.
Onslow, 48, graduated in 1978 with a BA in economics from Memorial University in St. John's. In 1982, he received an MA from McMaster University, while working in the industry as an assistant economist and bank analyst.
In June 1981, he joined Mutual Life of Canada. Around September 1984, he became a portfolio manager of the firm's U.S. equity portfolios. He received his CFA in 1984. In August 1998, when Altamira was building a new team, Onslow was approached about joining the firm and found it too intriguing to pass up. "It was a great opportunity -- never a dull moment," he recalls.
According to Onslow, the most recent integration process of Altamira Management with Natcan was completed during mid-2003. Subsequently, the "hands-on, seasoned team" has been in place for more than 15 months, he adds.
Six of the nine professionals are responsible for different sector portfolios, along with their analyst responsibilities. A brief, early-morning meeting kick-starts the day, and the team meets formally every week. The group sees about 400 companies a year.
At least eight of the 10 S&P 500 sectors are always represented in Onslow's diversified funds such as Altamira U.S. Larger Company. Natcan's internal guidelines are plus or minus 5% in any one sector, and Onslow is also restricted to a maximum 5% weighting for any one holding.
The broader sectors are broken down into specific areas. For example, if Onslow's group is keen on medical devices in the health care sector, they'll put a lot of weighting in that segment. The benchmark for the U.S. portfolio is the S&P 500 Index, while a blended benchmark is used for the health care funds.
When it comes to a sell discipline, the red flags include fundamental changes in management or in corporate strategies, or diminished opportunities. The portfolio turnover in Altamira U.S. Larger Company is "in the neighbourhood of around 125%," says Onslow.
Onslow believes his key strengths are twofold: First is his 20 years of experience in managing U.S. portfolios, "so hopefully I can bring the benefits of a lot of mistakes," he says, laughing. No less important is his ability to create a collaborative, team-based approach to investing. "The U.S. market is just too big and too complex for a single individual to do an adequate job, covering all the different sectors," he says.
Looking ahead, Onslow says he is cautiously optimistic. "I think we're transitioning more into a trading-range type market. Going forward in '04 and probably early '05, I think returns are going to be closer to the historical norm of around 10%."
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