While the financial crisis and macroeconomic headwinds have cast a shadow on the European banking sector, value investors at Oakmark in a memo today said they found select opportunities in the area based on their bottom-up research.
“…We felt that banks with less capital-intensive businesses, such as asset management or advisory, would be attractive as they could more easily navigate these higher capital requirements,” wrote Jason Long, a partner at the firm. “We also believed that increased capital requirements would result in a lower return on equity, which we incorporated into our valuations. Also, it became evident that banks with strong deposit franchises and liquidity would have a funding cost advantage over wholesale-funded banks and be better positioned during times of crisis. Finally, we felt banks with significant scale would be able to deliver products and services more efficiently than their peers.”
He listed several positions taken at Oakmark, where gurus Bill Nygren (Trades, Portfolio) and Davis Herro manage funds: BNP (XPAR:BNP, Financial), Lloyds (LYG), Intesa Sanpaolo (MIL:ISP), Credit Suisse (CS, Financial) and Julius Baer (XSWX:BAER, Financial).
Other gurus looked favorably at certain financials in Europe in the fourth quarter as well. The most-bought stocks in the sector, using the All-in-One Screener, were: UBS Group AG (XSWX:UBSG, Financial), Sofina (XBRU:SOF) and Investor AB (OSTO:INVE B).
UBS Group AG (XSWX:UBSG, Financial)
Two investors added to their positions in UBS Group in the fourth quarter, IVA International Fund (Trades, Portfolio) and Charles de Vaulx (Trades, Portfolio). IVA International increased their holdings by 3.21% to 1,271,928 shares, accounting for 1.1% of their total assets managed. Charles de Vaulx (Trades, Portfolio) increased his position by 0.24% to 0.72% of his total assets managed.
UBS Group AG was formed on June 29, 1998, when Union Bank of Switzerland (founded 1862) and Swiss Bank Corporation (founded 1872) merged to form UBS AG. UBS Group Ag has a market cap of $64.88 billion; its shares were traded at around $18.32 with a P/E ratio of 19.4 and P/S ratio of 2.5. The dividend yield of UBS Group AG stocks is 1.36%.
Sofina (XBRU:SOF)
The same gurus upped their stake in Sofina. IVA International Fund (Trades, Portfolio) acquired 3.21% more shares, bringing their total position to 129.186 shares, or 0.66% of their total assets managed. Charles de Vaulx (Trades, Portfolio) increased his position by 0.24% to 286,845 shares, or 0.57% of total assets.
Sofina is a holding company focusing its investments in listed companies. Sofina has a market cap of $3.34 billion; its shares were traded at around $96.20 with a P/E ratio of 16.40 and P/S ratio of 42.03. The dividend yield of Sofina stocks is 2.26%. Sofina had an annual average earnings growth of 11.4% over the past five years.
Investor AB (OSTO:INVE B)
Martin Whitman (Trades, Portfolio) and Invesco European Growth Fund (Trades, Portfolio) both grew their interest in Investor AB during the most recent quarter. Whitman boosted his stake by 15.58% to 760,880 shares, or 1.5% of his total managed assets. Invesco’s stake went up 15.15% to 1.7% of their investment assets.
Investor AB is a Sweden-based industrial holding company. Investor AB has a market cap of $263.68 billion; its shares were traded at around $343.70 with a P/E ratio of 4.9 and P/S ratio of 12.76. The dividend yield of Investor AB stocks is 2.33%.
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