Invesco European Growth Fund's Top 5 1st-Quarter Trades

Fund adds 3 new positions, dumps holding in German tech company

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James Li
Apr 13, 2021
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Invesco European Growth Fund (Trades, Portfolio), part of Atlanta-based Invesco Ltd. (IVZ, Financial), disclosed this week that its top five trades during the fiscal first quarter included the elimination of its SAP SE (SAP, Financial)(XTER:SAP, Financial) holding, an increase to its Gamesys Group PLC (LSE:GYS, Financial) holding and new positions in Ashtead Group PLC (LSE:AHT, Financial), CRH PLC (LSE:CRH, Financial) and Technogym SpA (MIL:TGYM, Financial).

According to its website, the fund seeks long-term capital appreciation by investing in a diversified portfolio of reasonably priced, quality companies in the European region. As of Jan. 31, the fund's $1.03 billion equity portfolio contains 57 stocks, with four new positions and a turnover ratio of 4%.

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The fund's top four sectors in terms of weight are industrials, financial services, health care and consumer staples, representing 25.07%, 18.87%, 12.33% and 10.93% of the equity portfolio.

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SAP

The fund sold 101,180 shares of SAP (

XTER:SAP, Financial), trimming 1.23% of its equity portfolio. Shares averaged 102.35 euros ($122.22) during the quarter ended Jan. 31; the stock is fairly valued based on Tuesday's price-to-GF Value ratio of 0.97. Based on GuruFocus estimates, the fund gained approximately 33.78% on the stock.

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Founded by former International Business Machines Corp. (IBM) employees, Germany-based SAP provides database technology and enterprise resource planning software to enterprises around the world. GuruFocus ranks SAP's profitability 9 out of 10 on several positive investing signs, which include a 4.5-star business predictability rank, a high Piotroski F-score of 7 and profit margins that outperform over 88% of global competitors.

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The fund said in its shareholder letter that it exited the holding "due to deteriorating earnings-quality-valuation metrics" based on the fund's internal research. GuruFocus ranks SAP's financial strength 6 out of 10: Interest coverage and debt ratios underperform over 60% of global software companies even though the company has a strong Altman Z-score of 4.51.

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Gurus with holdings in SAP's U.S.-based shares (

SAP, Financial) include Ken Fisher (Trades, Portfolio)'s Fisher Investments, Chris Davis (Trades, Portfolio)' Davis Select Advisors and Sarah Ketterer (Trades, Portfolio)'s Causeway Capital Management.

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Gamesys

The fund purchased 525,953 shares of Gamesys (

LSE:GYS, Financial), boosting the position 235.9% and the equity portfolio 0.89%. Shares averaged 11.67 pounds ($16.04) during the first quarter; the stock is significantly overvalued based on Tuesday's price-to-GF Value ratio of 2.15.

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According to GuruFocus, the U.K.-based online gaming company's operating margin and three-year revenue growth rates outperform over 82% of global competitors, suggesting good profitability.

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Ashtead Group

The fund purchased 179,701 shares of Ashtead Group (

LSE:AHT, Financial), giving the position 0.88% weight in the equity portfolio. Shares averaged 33.79 pounds during the first quarter; the stock is significantly overvalued based on Tuesday's price-to-GF Value ratio of 1.62.

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GuruFocus ranks the U.K.-based equipment rental company's profitability 9 out of 10 on several positive investing signs, which include a five-star business predictability rank and profit margins outperforming over 87% of global competitors.

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CRH

The fund purchased 209,309 shares of CRH (

LSE:CRH, Financial), giving the position 0.84% weight in the equity portfolio. Shares averaged 30.95 pounds during the first quarter; the stock is modestly overvalued based on Tuesday's price-to-GF Value ratio of 1.22.

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The Dublin, Ireland-based company manufactures a wide range of materials for building and construction projects. GuruFocus ranks CRH's financial strength 5 out of 10: Although the company has a solid Piotroski F-score of 6, interest coverage and debt ratios underperform over 60% of global competitors.

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Technogym

The fund purchased 846,247 shares of Technogym (

MIL:TGYM, Financial), giving the position 0.84% weight in the equity portfolio. Shares averaged 8.76 euros during the first quarter; the stock is fairly valued based on Tuesday's price-to-GF Value ratio of 0.92.

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GuruFocus ranks the Italian fitness equipment manufacturer's profitability 7 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7 and an operating margin that has increased approximately 17% on average over the past five years and is outperforming over 88% of global competitors. Despite this, three-year revenue growth rates are outperforming just over 70% of global leisure companies.

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Disclosure: No positions.

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I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!