There Is a Way Out of the Coronavirus Crisis, and Long-term Opportunities in an Oversold Equity Mark

Summary of Key Views

  • Natural disaster responses provide a framework for how to view the pandemic and how it might be resolved. We know how to do this, but we must work through it with both the government and private sector.
  • In regards to liquidity conditions, the system is bending but not breaking.
  • In terms of valuations, some companies are cheap for good reason, but many are just cheap—the victims of forced selling.
  • Near term, we see the bottoming in the market being driven by a calming of liquidity conditions and the Treasury market, fiscal policy implementation, vaccine progress and containment of the outbreak. The upcoming earnings season can provide clarity and stability to the markets, helping to separate the macro events and the micro events.
  • Likely winners in long term: large companies, multichannel retail, online retail, software as service, cloud and virtualization companies, beneficiaries of re-drawn supply chains, companies providing health and food/travel safety innovations.
  • Likely losers in long term: low return on capital and overcapitalized companies, smaller businesses in retail and restaurants, energy names hurt by the economic downturn and OPEC+ upheaval.
  • Calamos Growth and Income Fund is differentiated from peers by its multi-asset equity-oriented approach; the portfolio includes an actively managed mix of equities, convertible securities and risk-managed option strategies.
  • Top-down and bottom-up research (including comprehensive capital structure analysis) seek to provide a favorable asymmetrical risk profile, capturing more equity upside than downside.