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Marianne Ayala/Insider
- A new exchange-traded fund from GCI Investors is getting back to the basics of investing.
- “We are investing in underlying businesses and companies rather than just stocks,” said Guy Davis.
- His potential losses, he said, are much lower than risking investments on meme stocks and crypto.
One fund manager wants you to forget about the eye-popping gains from meme stocks and crypto and get back to the basics of investing.
“We sit very much at the opposite end of the spectrum to meme-stock investing,” said Guy Davis, managing director at Houston, Texas-based GCI Investors. “We are investing in underlying businesses and companies rather than just stocks.”
Two companies he likes are UK-based online-grocery delivery company Ocado, which has rallied 545% in the past five years, and waste-management company GFL Environmental.
“Waste is an incredibly unsexy industry,” he said. “Who would want to invest in a waste company when they can invest in a bitcoin mining company generating thousands of dollars in returns?”
But he said the level of stable returns from a waste management company — even during lockdowns spurred by the pandemic — is “incredible.” GFL went public in March 2020 when the pandemic was just starting. Since then, it’s risen 120% to about $37.
“You’ve got a very solid industry, and you’ve got something individually wonderful happening at the company that is going to boost your return on top of that. It enables us to have a very high degree of confidence in the future,” he said.
The firm’s first exchange-traded fund, called the Genuine Investors ETF, launched December 1 under the ticker “GCIG.” Waste management and grocery delivery may seem like a tough sell next to the massive gains of meme stocks like GameStop and AMC, which have gained 152% and 1,200% so far this year respectively, or the nearly 100% gain in the price of bitcoin. That’s not to mention the eye-popping gains of 37,000% for some metaverse-related cryptocurrencies.
But to someone who quickly became a bitcoin or meme-stock millionaire, Davis says, “Well done, fantastic news. Go and do something successful with it, because the chances of doing that again are infinitesimally small.”
He describes his investing approach as simplistic and old-fashioned. His Genuine Investors ETF holds 23 individual companies that the firm knows “inside and out” and that he said generally aren’t subject to outside risks like regulatory whims or commodities prices.
“The potential returns might be slightly lower, but our potential losses are far more contained,” he said.
Davis said the stock market just provides opportunities, not information about companies. The S&P 500, he said, is no longer a measure of the largest companies but the “most popular” ones. Tesla, a favorite among retail traders excited about EVs and Elon Musk, is in the top five, he noted.
“The stock is huge; the company is tiny in terms of what it actually generates,” he said.
Davis said he knows what the companies he’s investing in are worth, unlike bitcoin, which he said nobody “has any idea whether it’s worth 50 cents or a billion dollars.”
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