As we move into May, we are once again hearing the common refrain of "Sell in May and go away." Robert Maltbie, managing director of Singular Research, feels that while the refrain may hold, he expects that investors will need to be more selective (see WSJ video below). In particular, Maltbie feels that the rule of thumb works best after a nice run-up in stocks. Without that run-up, there is less downside to not selling. Of course, we have had a nice rally recently, but are still quite a bit off the highs, so even this rule of thumb has a layer of subjectivity to it this year. As for stocks and industries that have probably run-up, Maltbie highlights the consumer stocks, some banks, and some casinos. On the other hand, investors may want hold positions in infrastructure and green investment, due to the stimulus spending, and micro-small caps, due to their prices having been driven down too far.

The global infrastructure play continues to receive capital investment. According to an Asian Investor article, $18 billion is being raised globally by a number of firms for investments into infrastructure funds, with India receiving the most investment. JPMorgan and Macquarie Funds Management are raising $2 billion, while private equity investor Actis is raising $1 billion. Of interest is that various India-based organizations, whether private equity or venture capital-based, are are also investing $1+ billion sums. The combination of infrastructure needs in India and throughout Asia, along with various funds looking to diversity into this growing sector, appear to be driving the need to raise and deploy capital toward infrastructure investment. Recently, new infrastructure indexes were being developed to track infrastructure companies and allow easier investment in index-based ETFs (see previous post). Counter to this trend was the recent divesting of some infrastructure assets as a result of the credit crunch (see previous post), but this action seems to be isolated to Australia for now.

There is an interesting article in the Financial Times regarding the rush by some Australian infrastructure funds to divest assets. Just within the last month or so infrastructure has been receiving increased attention, some of which helped to trigger the creation of new infrastructure indexes (see previous post). Now, credit problems and the general global credit crunch are causing some infrastructure funds to look for ways to reduce their weighted average cost of capital, such as by cutting net debt, paying distributions only from operating cash flows, or even selling assets that are currently at high valuations. What a difference a month or two makes.