Why this money manager is shoring up cash and buying into commodities, genomics and Mexico

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Many investors believe the economy has avoided a recession – especially with markets rising and interest rate cuts under way. But money manager Thane Stenner has a different take.
“The recession has been delayed, and when it does come, it could be worse than people think,” says Mr. Stenner, senior portfolio manager and senior wealth adviser with Stenner Wealth Partners+ at Canaccord Genuity Wealth Management. His team, which has offices in Vancouver and Toronto, manages money for ultra-high-net-worth investors in Canada and the U.S., with minimum account sizes of about $10-million or families with net worth of at least $25-million.
Mr. Stenner thinks Canada’s economy is particularly vulnerable given Canadians’ soaring household debt levels. A recent Canada Mortgage and Housing Corp. report states Canada has the highest level of household debt among G7 countries, three-quarters of which is from mortgages. The Bank of Canada said recently that homeowners who are due to renew their mortgages over the coming years will face steep jumps in payments.
Mr. Stenner also points to worrisome economic data, such as an increase in insolvencies and the combination of surging condo listings and a drop in sales in major cities, including Toronto.
While interest rates have just started coming down in Canada, Mr. Stenner doesn’t see them returning to the historically low levels before hikes began in 2022.
“There’s a wall of debt that has to be refinanced, and we’re not ready for it, in my opinion,” he says.
Still, that hasn’t stopped his team from looking for buying opportunities while preserving cash to protect portfolios from a market downturn that Mr. Stenner expects could come later this year or in 2025.
His portfolios include discretionary public market investments – including a wide range of low-cost, global exchange-traded funds – and private alternative assets such as music royalties and student housing on a non-discretionary basis. His discretionary public market portfolio is up about 8 per cent so far this year and has an annualized return of 3.4 per cent since inception in September, 2021. His combined discretionary public and non-discretionary private portfolio is up 7.1 per cent so far this year and has an annualized return of 4.1 per cent since inception. The data are as of May 31 and include total returns net of fees.
The Globe and Mail spoke with Mr. Stenner recently about his investment style and what he’s been buying and selling:
Describe your investing style.
We take a low-volatility, absolute return approach. Our goal is to provide a smoother ride for our wealthier investors compared with the often volatile ups and downs of the market. We aim to achieve two-thirds of the upside of the S&P 500 and only one-third of the downside over the course of a market cycle, which is about four to seven years. We are active global investors looking for deep value, using tactical and technical overlays to find good entry and exit points.
What is your current cash position?
We’re holding about 40 per cent cash (as of June 6) in a combination of money market funds, short-term bonds, high-interest savings accounts and guaranteed investment certificates, all earning about 5 per cent. We had about 60 per cent cash just over a year ago and were down to about 12 per cent cash in mid-October last year. Since the fall, we’ve increased our cash position due to profit-taking and a belief that markets are currently overvalued. Note that Warren Buffett’s Berkshire Hathaway Inc. BRK-B-N currently has about US$189-billion in cash investments [which is a record and up from US$167.6-billion at the end of last year].
What have you been buying lately?
One area of focus is finding deep value and potential upside in the commodities sector, including metals and energy. A recent buy was Global X Natural Gas ETF HUN-T, which we bought last month after it fell about 65 per cent from its peak in August, 2022. We also bought Global X Uranium ETF URA-A on a dip in February.
In April, we purchased the ARK Genomic Revolution ETF ARKG-A, which invests in companies in the biotechnology industry, after it fell about 80 per cent from its peak in January. We think the genomics sector offers attractive growth potential.
A recent buy was iShares MSCI Mexico ETF EWW-A, which we picked up when its price fell after the country elected a new president earlier this month. We believe Mexico has strong growth potential and saw the recent drop as a good buying opportunity.
What have you been selling?
Two positions that we recently sold include KraneShares CSI China Internet ETF KWEB-A and iShares Emerging Markets Dividend ETF DVYE-A. We sold both to take profits and because we expect them to lose value in the coming months. We see technology as overvalued and believe emerging markets will face some headwinds in the near term.
We bought KraneShares CSI China Internet ETF in June and September last year – when it was down more than 70 per cent from its peak in February, 2021 – and sold it in early May for a gain of almost 19 per cent. We bought iShares Emerging Markets Dividend ETF on a dip in July last year and sold it in early May for a 22-per-cent gain.
Name a security that you wish you had bought or hadn’t sold.
In early April, we halved our positions in VanEck Junior Gold Miners ETF GDXJ-A [and] iShares MSCI Global Silver and Metals Miners ETF SLVP-A to about 6 per cent from 12 per cent each. Both ETFs dropped after we trimmed them but have since rallied a bit. We still have a relatively strong position in both ETFs, but in hindsight, it would’ve been better to hang on to them for a little longer.
This interview has been edited and condensed.
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