What Have European Value Managers Been Buying?

In the first of a new series, we look at which stocks some of the most highly rated European fund managers have been buying

Fernando Luque 02/03/2021 16:23:00
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Investors are a curious bunch, and when making our own decisions we often want to know what everyone else is doing first. In this first of a new article series, we will look at which shares some of the best fund managers across Europe are buying.

For this, we shall be focusing on funds which have a Morningstar Analyst Rating of Gold, Silver or Bronze as well as a “Process” pillar rated as at least above average. Our first watch list of funds belong to the Large Value section of the Morningstar Style Box. Our other two lists will home in on Growth and on Blend fund managers, so we can see which stocks are attractive to different investment styles.

The final criteria is recency; we are only including those funds which have available a list of portfolio holdings which is a maximum of two months old. The tables below are based on the top 10 holdings in each portfolio, as regulatory requirements do not demand funds do disclose their complete portfolios regularly, so this information is not available for many European funds.

What Have Value Equity Managers Been Buying?

Here, we look at six funds that meet the criteria and what they have been buying.

The first table shows the most common stocks held across the top holdings of all six portfolios. What is particularly striking across these Large Value funds is the diversity between their portfolios. Across six lots of top 10 holdings, we find 48 different stocks in total. This certainly explains the great difference in performance across these funds in 2020. BGF European Value, for example, returned 1.1% over the year and Brandes European Value 0.1%. Meanwhile, Franklin Mutual European was down 9.8% in the year, and Kempen European High Dividend lost 8.4%.


But there is some commonality across the different portfolios. GlaxoSmithKline (GSK) stands out, appearing in four of the six top holdings lists. It is the largest holding in Brandes European Value (as of December 2020), second largest in Kempden European High Dividend, and fifth largest in both Franklin Mutual European and M&G European Strategic Value.

The pharma giant has a 4-star rating from Morningstar analysts and according to Damien Conover, a Morningstar equity analyst specialising in this sector, "as one of the largest pharmaceutical companies, GlaxoSmithKline has used its vast resources to create the next generation of healthcare treatments. The company's innovative new product lineup and expansive list of patent-protected drugs create a wide economic moat, in our opinion”.
Two other companies feature in three portfolios: the pharmaceutical company Sanofi (rated 4 stars by Morningstar) and the Portuguese utility EDP (3 stars).


Next, we look at new stocks to enter the top 10 holdings of each fund. As we can see, some funds have a higher turnover than others – that is to say, they trade more frequently. The Kempen European High Dividend fund, for example, saw six new stocks enter into its Top 10 holdings in December.

Typically, a new entrant tends to occupy the lower echelons of the holdings list as the manager builds up his position over time. But, in some cases, we can see a very strong entry, as has happened in the case of Kempen European Dividend, where Glaxo has gone straight to second position in the portfolio and Swatch Group (UHRN) to third.


Our objective with these tables is to uncover investment ideas that reflect the most recent buying activity of European Equity managers (within each style investment) in a sufficiently timely manner for investors to bring them value. By comparing Morningstar's equity analysts' views with the activity of some of these top managers, we hope to periodically uncover good ideas that investors can dig a little deeper into to see if they justify an investment.

What Have Fund Managers Been Buying?

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About Author

Fernando Luque

Fernando Luque  es el Senior Financial Editor de www.morningstar.es

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