After his fund almost tripled the S&P 500’s in 2016, Michael Gregory is now betting on health-care stocks to continue with the good run. Highland Alternative Investors’ chief investment officer is confident that the health-care sector can stage a huge rebound this year. In addition, he believes that the US pipeline operators will make higher returns from their businesses this year.
According to the market data, the financial expert’s mutual fund posted returns of 31.6 percent. In the same period, the large-cap S&P 500 SPX, +1.07 percent, posted a return of 12 percent while the small-cap Russell 2000 Index RUT, +1.53 percent, posted 21.3 percent. This was an extraordinary achievement for the fund manager. Many experienced hedge fund managers have praised his innovative investing strategies.
Gregory’s unit, the Highland Alternative Investors, is based in Dallas. It manages over $15.4 billion in capital. James Dondero helped Gregory to manage the small-cap stock fund. James is the president and co-founder of Highland Capital Management (HCM). HCM owns this business unit. The estimated value of the fund’s assets is $55 million.
Gregory has praised HCM’s ‘credit competency.’ He points out that the company’s decision to invest in pipeline partnerships in early 2016 are now paying off. While making investment, many investors had left the sector, as the oil prices plummeted. Gregory added that returns from these investments made over half of the fund’s total return in 2016. He further added that none of the selected partners cut dividends after HCM purchased the shares.
Energy investments made by the funds brought returns of over 100 percent. The Two MLP winners were SemGroup Corp SEMG, +1.54 percent and Energy Transfer Equity LP ETE, +1.70 percent. However, the company has reduced the size of its investments in the stocks by 2/3. Gregory notes that as the oil prices continue to rise, the investments will start to make more returns. The trader believes that oil will soon hit the $60 mark.
The chief investment officer’s confidence in health-care stocks has surprised many people. This is because this is the only sector of the S&P 1500 Composite Index to post a decline. Despite shortcomings, Gregory is optimistic that the industry will rebound in 2017.