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Europe, despite woes, still a source of opportunities

Jim Rothenberg
Portfolio manager
Based in:
Los Angeles
Investment experience:

KEVIN CLIFFORD: Jim, shifting gears to Europe — and I know you’ve traveled in Europe this year — we hear portfolio managers saying that our analysts are finding many opportunities in companies in Europe today. Given the macro environment, again, how do you think about that?

JIM ROTHENBERG: I think Europe is a short-term challenge. I’m sure there will be some pops and some bounces as money gets put into various economies. But the sustainability of recovery there is still, I think, a great challenge.

The thing that interests me is that European stock markets have not done as well as the U.S., and so, in many cases, valuations of European companies have lagged or are a lot less expensive than they are in the U.S. So what I really look at is not that they’re European companies — they may just be domiciled there — but [that] their businesses are global.

Let me give you a couple of examples. If you look at a company like Unilever or a company like Nestlé, these are global businesses. And in many cases, they may have 30, 40, even 50% of their business in emerging countries, but they happen to be domiciled in Europe. And Siemens is another example where a great deal of their business is global infrastructure and global electronics, and yet they happen to be a German manufacturer. So they get a bit tarnished with the fact that they’re in Europe, but these are really global businesses.

So I don’t really think of Europe as the place I’m trying to invest; I’m just trying to invest in companies that have global opportunities.

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