KFAC Commentary: Background & Rationale for Recent Stock Trades

Nicholas Coppola, CFA

 

March 18, 2020

With stocks sharply selling-off over the last several weeks, we are looking for opportunities to add exposure to high-quality names at discounted prices.   Consistent with this strategy, we have recently added Microsoft Corporation (MSFT) to portfolios.  Microsoft operates a number of well-known businesses including Azure cloud services, Microsoft Office, Windows operating system, LinkedIn, Xbox hardware and software, Xbox Live, Surface laptops and tablets, among many other products and services.

Under the leadership of Satya Nadella, who was appointed CEO in 2014, Microsoft has transformed itself, with rapid growth in the cloud computing business, and the transition of Microsoft Office into a cloud-based subscription model generating recurring revenue.  At Kays Financial, we also consider ourselves techno-optimists, and we like Microsoft’s position in cutting edge technology, which we view as a ‘free-option’, such that innovation in areas like artificial intelligence, virtual/augmented reality and the ‘internet of things’ drive future revenue and profit growth.

We are also taking this opportunity to add to our existing Booking Holdings (BKNG) position.  While it’s clear that the online travel industry will be severely impacted by the coronavirus in the near-term, we believe this business will eventually snap back into a more normal environment as the virus abates and people return to more historic travel patterns.

While the recent market downturn has surely been emotional for investors, we also recognize this as a period of opportunity, and are rolling up our sleeves looking for high-quality companies at bargain prices.  Stay safe and please feel free to reach out with any questions. 

Sincerely,

Nicholas Coppola, CFA

Senior Portfolio Manager

 

Nicholas Coppola, is a Senior Portfolio Manager at Kays Financial Advisory Corporation. He can be reached at (770) 951-9001 or at ncoppola@scottkays.com.

 

This report and Mr. Coppola’s comments are provided as a general market overview and should not be considered investment or tax advice or predictive of any future market performance. Any security mentioned in this report may not be suitable for all investors. No investment mentioned in this newsletter constitutes a recommendation to buy, sell or hold a particular investment. Such recommendations can only be made on an individual basis after an assessment of an individual investor’s risk tolerance and personal circumstances. Past performance of any investment mentioned is not a guarantee of future performance. Statements regarding the investment concerns and merits of any investment and fair market value computations are strictly the opinion of Kays Financial Advisory Corporation. Employees of KFAC and KFAC clients may have positions and effect transactions in the securities of the issuers mentioned here in.