Pimco’s Kashkari Buys Wal-Mart, Spirit on Volatility

Pacific Investment Management Co.’s Neel Kashkari said he is buying companies that outperform when markets are volatile, such as Wal-Mart (WMT) Stores Inc. and Spirit Airlines Inc. (SAVE)

“We are buying equities today but we’re being very selective,” Kashkari, who heads global equities at Newport Beach, California-based Pimco, said in an interview today on Bloomberg Television’s “In the Loop with Betty Liu.” His firm manages about $1.77 trillion. Pimco is “buying those names that we think have very strong fundamentals and more downside protection against some of the big macro shocks.”

Wal-Mart rallied 13 percent this year through yesterday, while the Standard & Poor’s 500 Index climbed 5.4 percent. The Bentonville, Arkansas-based retailer, the world’s largest, will continue to advance as Americans “continue to pinch pennies,” according to Kashkari. He said discount carrier Spirit Airlines will expand as bigger rivals suffer losses. The Miramar, Florida-based company that promotes fares as low as $9 jumped 33 percent this year through yesterday.

Spirit added 1.2 percent to $20.72 today, while Wal-Mart fell 0.6 percent to $67.30.

The S&P 500 fell 0.6 percent this week as the Federal Reserve cut growth estimates and disappointing data added to signs of a global slowdown. The Fed also extended its economic stimulus program known as Operation Twist.

Bill Gross, Pimco’s co-chief investment officer, warned against risk assets today, saying in a Twitter post that the markets are vulnerable as the “monetary bag of tricks empties.” Kashkari predicted the central bank will adopt a more aggressive approach by conducting a third round of quantitative easing, or stimulus action, later this year as U.S. unemployment remains high and Europe’s debt crisis continues.

To contact the reporters on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net; Betty Liu in New York at bliu17@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net