The Invesco European Growth Fund (Trades, Portfolio) disclosed this week it established new positions in two companies: Bureau Veritas SA (XPAR:BVI, Financial) and Alcon Inc. (XSWX:ALC, Financial). The fund’s three largest sales for the quarter ending April 30 were Israel Discount Bank Ltd. (XTAE:DSCT, Financial), Standard Life Aberdeen PLC (LSE:SLA, Financial) and Sberbank of Russia PJSC (MIC:SPERP).
The fund’s five portfolio managers seek long-term capital appreciation through investments in high-quality growth companies in both developed and emerging markets throughout Europe. As of quarter-end, the 59-stock equity portfolio’s three largest sectors were financial services, industrials and consumer discretionary.
The fund said in its shareholder letter that while the fund’s investor class shares returned 10.90% for the quarter, underperforming the MSCI Europe Growth Index’s return of 12.99%, it outperformed the index by approximately 0.33% per year over the past 10 years. Strong stock selection in the real estate and information technology sectors offset weak performance in the health care and consumer discretionary sectors.
Bureau Veritas
The fund purchased 667,763 shares of Bureau Veritas, giving the position 1.37% weight in the equity portfolio. Shares averaged 21.03 euros ($23.66) during the quarter.
The fund mentioned in its letter that management hopes the “broadening of investor focus” that occurred since the second half of 2018 will continue in the second half of 2019 and believes its “quality growth style” is going back in favor.
Bureau Veritas engages in the testing, inspection and certification of products and materials, making sure the products maintain global standards. GuruFocus ranks the company’s profitability 8 out of 10 on several positive investing signs, which include a strong Piotroski F-score of 8 and a return on equity that outperforms 92.82% of global competitors.
Other gurus that own shares of Bureau Veritas include David Herro (Trades, Portfolio) and Charles de Vaulx (Trades, Portfolio).
Alcon
The fund purchased 116,323 shares of Alcon, giving the holding 0.54% equity portfolio weight. Shares averaged 56.61 francs ($57.20) during the quarter.
Alcon spun off from Novartis Inc. (NVS, Financial)(XSWX:NOVN) on April 9. The company then said on May 15 that revenues for the quarter ending March 31 were $1.8 billion, up 4% on a constant currency basis from revenues for the prior-year quarter. CEO David Endicott said strong growth in the company’s surgical businesses boosted management’s confidence in Alcon as a standalone business.
Israel Discount Bank
The fund sold 5,205,995 shares of Israel Discount Bank, trimming the stake 59.58% and its equity portfolio 1.48%. Shares averaged 13.07 shekels ($3.68) during the quarter.
Israel Discount Bank offers a wide range of financial services to individuals and businesses. GuruFocus ranks the bank’s financial strength 3.8 out of 10: Although the cash-to-debt ratio of 2.28 outperforms 64.79% of global competitors, Israel Discount Bank’s equity-to-asset ratio of 0.07 underperforms 77.53% of global banks.
Standard Life Aberdeen
The fund sold 4,083,620 shares of Standard Life Aberdeen, trimming the holding 92.96% and its equity portfolio 1.08%. Shares averaged 2.6 pounds ($3.25) during the quarter.
U.K.-based Standard Life Aberdeen operates several customer channels, including Standard Life investments, U.K. and Europe pension and savings and India and China. GuruFocus ranks the company’s financial strength 5 out of 10: Although the equity-to-asset ratio of 0.59 outperforms 92.50% of global competitors, Standard Life Aberdeen’s cash-to-debt ratio of 0.58 underperforms 75.90% of global companies that provide life insurance.
Sberbank of Russia
The fund sold 2,535,398 shares of Sberbank, trimming the stake 10.11% and the equity portfolio 0.58%. Shares averaged 188.05 rubles ($2.98) during the quarter.
The fund mentioned in its shareholder letter that Sberbank was a top contributor to portfolio returns for the quarter, driven by a rally in emerging markets in January following the December 2018 selloff. The Moscow-based bank’s cash-to-debt ratio of 2.82 and equity-to-asset ratio of 0.13 outperform 69.17% and 77.04% of global competitors.
Disclosure: No positions.
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