Investors ‘should stop trying to figure out when or if the Fed is going to pivot,’ Boyar Research President says

Boyar Research President Jonathan Boyar joins Yahoo Finance Live to discuss top stock picks, the U.S. banking crisis, rate hikes, and the outlook for investors.

Video Transcript

RACHELLE AKUFFO: As US investors deal with rising rates, higher inflation, and a banking crisis, there are still places to put your money. Joining us now to give some stocks to watch is Jonathon Boyar, president of Boyar Research and the host of "The World According to Boyar" podcast. Good to have you on the show, Jonathan. So I want to get right to it and get to some of your picks because a lot of these are really outside of the mainstream. So starting with Topgolf Callaway Brands, why them?

JONATHAN BOYAR: Yeah. First, thank you for having me. And yes, they're outside the mainstream because I think that's the way investors will be able to make money over the next three to five years. Topgolf Callaway Brands in particular is an interesting story. It owns the traditional golf Callaway Business, but during the last crisis, it opportunistically bought the 86% of Topgolf it already didn't own. And it's going to be half their EBITDA. So right now, you're getting a growth story at a value price. You're-- about 50% of their EBITDA in 2023 will be Topgolf. And there's lots of room for expansion. It's run by Chip Brewer, who's a fantastic operator, and we're really excited about it.

RACHELLE AKUFFO: Now, another one, Liberty Braves Group. A lot of people perhaps not that familiar with this group.

JONATHAN BOYAR: Yeah, Liberty Braves is a John Malone controlled company. It owns the Atlanta Braves baseball team. We have reason to believe over the next couple of years, it will be sold. And John Malone is a rational seller of these assets. It's trading around $33 a share. We think it's easily worth in the mid 50s in a sale, and it owns valuable real estate as well.

RACHELLE AKUFFO: And your third pick here, Markel Corporation. And you say it's often referred to as the baby Berkshire. Talk about that company and some of the comparisons there with Berkshire Hathaway.

JONATHAN BOYAR: Yeah, it's a fantastic company headed by a guy named Tom Gainer, who-- and Berkshire owns 3 and 1/2% of it. It's an insurance company that, like Berkshire, uses the money it gets in premiums to buy common stocks. It also has something called Markel Ventures where it opportunistically buys entire businesses, so there's a PE component there. It has a healthy balance sheet. And over the last month or so, when all the banks and financials sold off, it sold off in sympathy. And investors, I think, are getting a real attractive entry point.

RACHELLE AKUFFO: So then let's also take a macro view. We were talking with our previous guest about this flight to quality. What are some of the trends that you're watching there and some of the risks that people should be aware of?

JONATHAN BOYAR: The risks, as always, is valuation. You have to know what you're paying, and you have to know what you're buying, and you have to buy things at a significant discount to intrinsic or private market value. You shouldn't chase things just because something is quality. You have to also look. What are you paying for that? So investors have to be very cognizant of that. And also, you also want to look at the balance sheet of these companies. Are they going to be able to survive two or three years if there's kind of credit hiccups in the market?

RACHELLE AKUFFO: And I also wanted to take a look at some of these small cap companies as well. Any standouts for you there?

JONATHAN BOYAR: Well, Liberty Braves and Topgolf are considered in the small cap area. I think it's the cheapest area of the market. It's where investors, I think, have the biggest edge because a lot of institutions and the sell side really don't cover them. So people who are willing to do their homework can make a lot of money over the next two to year years, investing in these kind of hidden gems.

RACHELLE AKUFFO: So for people who are looking for, I guess, what would be considered safe havens, I mean, obviously, bonds interest rate sensitive. But where else could they be looking in terms of safe havens if they're not perhaps wanting to get into some of these small caps?

JONATHAN BOYAR: Well, I mean, you're getting a 4% yield in your money market, so and you're taking very little risk. So, you know, and that's competition for stocks, and investors should really realize that. And treasuries could be attractive as well. But I would go very short-term on these things. I would not chase-- I would not take a duration risk.

RACHELLE AKUFFO: And is there anything you like internationally? A lot of people are sort of looking at emerging markets, potentially China, as it continues to open up post-COVID. But are you seeing anything in emerging markets that you like?

JONATHAN BOYAR: We prefer to invest in companies that have emerging market exposure that are US-based companies. We just feel like the accounting and rule of law, et cetera, are more in our favor, and it's in our circle of competence.

RACHELLE AKUFFO: And so in terms of your outlook, at a certain point, when the Fed does pause and perhaps eventually start to cut rates, how would you suggest people pivot when they look at their portfolios?

JONATHAN BOYAR: I think investors should stop trying to figure out when or if the Fed is going to pivot and start looking at individual stocks. Are they cheap? Are they not? And not try and trade around these things. People should buy great companies and hold on to them through thick and thin.