Top ideas from Mike Vinokur, Propellus Wealth Partners (iA Private Wealth)
Portfolio Manager Sitting 37% in Cash is Buying These 3 Stocks
Watch the full episode: Are you chasing returns while smart money waits on the sidelines? In this episode of In the Money with Amber Kanwar, portfolio manager Mike Vinokur explains why he’s holding 37% cash. This makes his stock picks all the more interesting, because clearly he is hesitant to deploy big dollars. Below are stocks that made the cut.
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Alphabet (GOOGL)
Why Mike Likes It:
Leadership in Technology: Alphabet has been at the forefront of technological evolution for 25 years, driving innovation rather than lagging behind.
Strength in Search: Despite competition from generative AI like ChatGPT, Vinokur believes Alphabet’s Gemini AI system will maintain its dominance in search, which remains its primary revenue driver. He notes that ChatGPT and other LLMs are not as effective or quick for search purposes compared to Google’s browser.
Diversified Business: Alphabet operates like a “mini conglomerate” with assets like YouTube, Waymo (autonomous vehicles), Willow (quantum chip development), cloud infrastructure, and Google Docs, creating a robust business moat.
Resilience to Regulatory Risks: Even if regulatory pressures lead to a breakup, Vinokur sees this as a positive, as breaking out components could unlock higher valuations by eliminating the conglomerate discount.
Upside:
Vinokur estimates Alphabet’s fair value at $195 to $210 per share, compared to its current trading price of around $150, suggesting a potential upside of 30% to 40%.
Air Lease (AL)
Why Mike Likes It:
Simple, Resilient Business Model: Air Lease leases aircraft to airlines under long-term contracts, functioning like a bank for expensive equipment. This model ensures steady payments, as airlines must pay leases regardless of travel demand, similar to a car lease.
Strong Industry Position: Air Lease benefits from close relationships with Airbus and Boeing, securing new aircraft inventory for the next five to six years. This gives them a competitive edge, as airlines often prefer leasing over purchasing due to high costs.
Fuel-Efficient Equipment Demand: Airlines lease newer, more fuel-efficient aircraft to maintain competitiveness, reducing the risk of lease defaults, as Air Lease can repossess equipment if payments lapse.
Interest Rate Opportunity: With interest rates likely peaked, Air Lease could refinance its debt at lower rates, reducing funding costs and boosting profitability.
Upside:
Recently trading at $53 per share, Air Lease has broken above its historical ceiling of $51–$52. Vinokur sees significant upside due to guaranteed lease payments over the next five to ten years and potential profitability gains from lower interest costs, though he doesn’t specify an exact target price.
Lincoln National (LNC)
Why Mike Likes It:
Stable Cash Flow from Life Insurance: Lincoln National’s life insurance business generates steady cash flows. If policyholders stop paying premiums, liabilities disappear as policies lapse, reducing risk and boosting retained earnings.
Attractive Valuation: Trading at $33 per share, the stock is significantly below its Q4 2024 book value of $72, offering a compelling discount despite past challenges from rising interest rates and investment book losses in 2022–2023.
Strong Fundamentals: The company offers a decent dividend, expects earnings of $7.50–$8 per share next year with growth potential, and maintains a high risk-based capital ratio (420–430%), indicating financial strength.
Buyback Potential: After pausing buybacks to rebuild capital, Vinokur anticipates Lincoln National will resume “massive” stock repurchasing soon, which would be highly accretive given the stock’s low price relative to book value.
Turnaround Story: Recent management changes and a cleaner balance sheet position Lincoln National for recovery from past challenges.
Upside:
With the stock at $33 and a book value of $72, Vinokur sees substantial upside, potentially doubling in value or more, especially if buybacks accelerate and earnings grow as projected.
DISCLAIMERS: The information provided in this podcast is for informational purposes only and does not constitute financial, investment, or professional advice. The views expressed by the host and guests are their own and do not necessarily reflect the opinions of any organization or company. The host and guests may maintain positions in any securities discussed on the podcast. Always consult with a qualified financial advisor or professional before making any investment decisions.
