The stock market’s near-historic gulf between the priciest and cheapest stocks creates the opportunity of a decade for investors, according to a portfolio manager at the Julius Baer Group Ltd.-controlled Kairos Investment Management Ltd.
Even as this year’s rally added $9 trillion to the value of global equities, outflows have continued, preventing pockets of the market from erasing December’s sell-off and expanding a gap in valuations between some stocks.
Coupled with above-average earnings growth, these segments of inexpensive shares are a gold mine for investors seeking another five years of strong returns, says Federico Riggio, whose 310 million-euro ($351 million) Kairos Pegasus Fund S.A. hedge fund lists Porsche Automobil Holding SE and Volkswagen AG among its top long-term holdings.
In addition to Porsche and Volkswagen, Kairos Pegasus Fund’s top long stock holdings in February included a Greek property investment company Grivalia Properties REIC. Porsche trades at 4 times estimated earnings, about half of the sector’s average valuation, and Volkswagen at 5 times.
Kairos Pegasus Fund invests in stocks with a long-short, event-driven and medium-volatility strategy, with a focus on European and some global value shares. The fund returned about 10 percent in the first two months of this year, according to its February factsheet, outpacing the HFRX Equity Hedge Index’s gain of 4.7 percent in the same period.
Since its 2014 inception, the fund is up 155 percent versus the index’s drop of 4.1 percent, but on a 12-month view it has lost 6.9 percent, which Riggio blames on the underperformance of value stocks: the MSCI Europe Value Index last year posted its worst drop since the 2008 financial crisis.
Charts: Used with permission of Bloomberg Finance L.P.
Read more:
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.