'Chewy is greatly positioned for growth' amid coronavirus crisis: portfolio manager
Yahoo Finance’s Brian Sozzi and Alexis Christoforous speak with Gabelli Pet Parents Fund Portfolio Manager Dan Miller on how coronavirus is impacting the pet industry.
Video Transcript
ALEXIS CHRISTOFOROUS: This crisis is putting a new spotlight on our pets and how we care for them. You know, the pet food delivery service Chewy now says it's getting swamped with orders. It's taking 7 to 10 days to ship out. But this could also present an opportunity to pet parents who want to invest, and here to talk about it is Dan Miller. He runs Gabelli's Pet Parents Fund. Good to see you and your furry friend this morning. What is his name or her name? And also I understand Chewy is the number-one holding in your fund. Why?
DAN MILLER: Yeah, well, this is Pippa. And like so many of our pets these days, they are thrilled to have us working from home. I guess the only challenge is that, like all of us, we haven't had haircuts in a while, so Pippa's a little bit long in the back here.
Yeah, Chewy's about 8% of our fund. It's been a terrific stock this year and, I guess, since it's gone public. And we think that, you know, they're greatly positioned for momentum in pet ownership, which is rising to all-time highs as we seek companionship.
BRIAN SOZZI: Dan, curious on we're starting to see a lot of vets closed right now. Does that impact any of your holdings?
DAN MILLER: Yeah, sure, it does. I mean, the number of treatments, elective and otherwise-- just as for humans, pets are being impacted. Vets are closed for certain things. But, you know, they're also available on appointment, and there are mobile clinics set up at retailers and in parking lots. And so as we think, again, more and more about how pets impact our lives going forward, there will be plenty of opportunities to increase the way we think about pets as our really, you know, children and take care of them with food, which is a $30 billion industry in the US, but also have them-- have them live longer.
ALEXIS CHRISTOFOROUS: You know, at the Gabelli Pet Fund, I was looking at your holdings. Yes, Chewy is your largest holding, but you also hold some nontraditional names when we think about pet care. You have a good amount of biopharma and also tech names, right? Why?
DAN MILLER: Well, I mean, we own tech if they are involved in pet sales. So, for example, Amazon is obviously the biggest global retailer for pet products, and so we own some Amazon, but not too much. And we're global in nature, so we own companies that trade in London. We own, for example, the Chewy of Europe, which is called zooplus.
BRIAN SOZZI: Dan, what's the one takeover target in the fund?
DAN MILLER: Well, there's been so much consolidation in the pet industry over the last five or six years. I see on your screen that you mentioned Kindred, which is a biotech that we think is probably a takeover target.
ALEXIS CHRISTOFOROUS: Where do you see other opportunities for pet owners who want exposure in this space?
DAN MILLER: Other opportunities?
ALEXIS CHRISTOFOROUS: Yeah, within the fund.
DAN MILLER: Oh, I mean, we own 30 stocks. We think that, you know, as a basket, it's a terrific opportunity to invest.
BRIAN SOZZI: Do you think, Dan, Chewy's ultimately in play?
DAN MILLER: Probably not. I mean, Chewy's an $18 billion market cap. It's a great business. I wouldn't-- I wouldn't expect that someone's going to acquire Chewy.
ALEXIS CHRISTOFOROUS: Do you see any of these companies not being able to survive the pandemic?
DAN MILLER: No. I think, again, you know, our fund's only down 2 and 1/2% for the year. I think that most of them have strong balance sheets. Most of them have strong growth. And so they're all well positioned.
ALEXIS CHRISTOFOROUS: All right, Dan Miller, portfolio manager of the Gabelli Pet Parents Fund, thank you. We want to thank Pippa. Very well-behaved, Pippa.
DAN MILLER: Thanks. Nice to be here.
