Brian Beitner, CFA, Managing Partner of Chautauqua Capital Management – A Division of Baird, recently provided his insights about investing in Europe in a Yahoo! News story titled "Should Investors Look at Europe for Bargains?"
Investors should be choosy. Beitner says that means investors who want exposure to European equities need to be selective. For example, the firm favors European companies whose sales come outside the European borders, where economic growth is more robust.
"The opportunity to invest in Europe in our eyes comes from the notion that you have advantaged-companies that have world class management, world class IT, an educated workforce at their headquarters, (and) a very low cost to borrow," he says.
"When they tap into higher growth markets it's the best of both worlds."
Examples of companies using that strategy are pharmaceutical companies Novo Nordisk (NVO) and Roche Holdings, semiconductor firm Arm Holdings (ARMH) and Swiss banker Julius Baer, which Baird holds, Beitner says. These are also large-cap companies and market-share leaders in their segments.
Because of the European Central Bank's highly accomodative monetary policy, 10-year government bonds are around 0.14 percent, which makes financing easier, he says.
Some also have prestige part of their brand.
"Julius Baer is a pure-play Swiss private bank," Beitner says. "You have to be in Switzerland to be in a Swiss bank. There's a cachet to being a Swiss bank."
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