article , video 09-09-2014

Bill Hench on Health Care and Energy

Portfolio Manager Bill Hench talks to Principal Dave Gruber about value opportunities he saw in the Health Care and Energy sectors and events in those areas that benefited some of his stock picks. 


Dave Gruber: The past 12 months have been a very strong period. Looking at the portfolio, specifically energy stocks and healthcare stocks have done very well over the last 12 months. Talk to us about what you were seeing going into those names and what happened in those spaces.

Bill Hench: Energy provided a great opportunity for investors like ourselves, because what happened in North America is we had a very depressed natural gas price, and as such, companies serving that industry were not making as much money as the market had expected.

So during that time, when they were having difficulty getting returns because of the low gas price, we were able to accumulate large positions in a lot of the service industries. As the oil price remained high and gas prices increased, we had a situation in North America that we hadn’t seen in a long time, which was a very strong gas market and a very strong oil market. We took advantage of that. We did invest in the exploration side as well, but it was mainly as a result of our investments in the services that we were able to have success.

Healthcare was a difficult area for us because many of the sectors in it were very expensive. However, certain companies that are making devices and facilities operators provided a good opportunity for us.

So although we generally don’t focus on the biotech area, we do spend a lot of time looking at facilities and devices. And as the employment situation got better, and as excitement grew about the Affordable Care Act, about more people participating in the healthcare world, we were able to take advantage of that strength.

Important Disclosure Information

The thoughts and opinions expressed in the video are solely those of the person speaking and may differ from those of other Royce investment professionals, or the firm as a whole. There can be no assurance with regard to future market movements.

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