There has been plenty of action in the stock market, particularly in the United States. In Europe, however, market sentiment has not been as strong so it is interesting to see how European fund managers are positioned. Here are five stocks traders in Europe are looking at.
Intesa Sanpaolo (MIL:ISP, Financial)
In an interview with Morningstar, Rob Burnett, manager of Neptune European Opportunities Fund, admits he bought into banks too early but maintains these value investments are poised to rebound sooner or later. His fund had large holdings in Italian banks in late 2015, but his expected consolidation and pickup in the sector is happening in a much slower and less powerful way than anticipated. This can be seen as a contrarian position as Italian banks have suffered some headwinds early in the year with talks of bailing out the large players.
Nordea Bank Polska (WAR:NDA, Financial)
Another interesting banking stock, this time held by European fund manager John Bennett of Henderson Global Investors, is Nordea Bank. Nordea Bank is listed in New York and is engaged in corporate banking, along with retail and private banking. He believes that once the election jitters in the Netherlands and other parts of Europe abate, these shares could be in for a strong rally. He points out the Nordics have learned their lesson from past crises much better than their neighbors and have consolidated banking on the domestic front.
Kesko Oyj (OHEL:KESAV, Financial)
Economoist Daniel Lacalle points out it may be the end of the earnings recession in Europe, even as several financial and political uncertainties are present. He mentioned there has been a negative surprise in the Consumer Staples sector but that a rebound may be likely as low interest rates and cheap debt start to kick in. To top it off, the relative affordability of European stocks compared to U.S. shares could attract more investment activity in the near term and therefore keep markets supported.
One example of this is Kesko, a Finnish food retailer. The company has been under pressure in the domestic market, so management appointed a new CEO with a strong track record in restructuring businesses.
Goldman Sachs Group Inc. (GS, Financial)
The man who "broke" the Bank of England, George Soros (Trades, Portfolio), has been loading up on shares in the U.S. financial sector as President Trump promised financial deregulation during his campaign and inauguration. Soros Fund Management held a new stake of 62,100 shares of Goldman Sachs as of Dec. 31, 2016, along with call options.
Note, however, that Soros has predicted the U.S. stock market will tumble around 10% during Trump's presidency. He is currently drawing flak for his loss of $1 billion in his personal account in the aftermath of the U.S. elections when markets climbed to record highs.
Prudential Financial Inc. (PRU, Financial)
European fund managers are also looking outside of Europe for potential growth areas, and the Asian region is a pretty bright spot. Although Prudential is listed in the United Kingdom, it is expanding into the Asian market, which is relatively unpenetrated in terms of life insurance, according to European Equity Fund manager Dean Tenerelli from T. Rowe Price.
Aside from that, this company also has a good stronghold in the U.S. financial sector, which is poised for more gains if tax reform and financial deregulation plans push through. To top it off, Prudential has a record of being well managed and its marginal business has been able to achieve over 20% returns on equity.
Disclosure: I have no position in the stocks mentioned.Â
Start a free 7-day trial of Premium Membership to GuruFocus.
