Philip Wolstonecroft to manage bottom-up portfolio of 50 stocks in Europe
Artemis is to offer an offshore version of its European Growth unit trust which it launched in February. Both funds will be run by the group's newly recruited fund manager Philip Wolstonecroft.
The unit trust is run as a concentrated portfolio of 50 stocks, while the focus is primarily bottom-up, Wolstonecroft said he is a market realist. 'I am aware of shifting sentiment among investors and fund managers ' I do not try to fight trends.'
The aim is to buy stocks that are growing faster than the market, with a focus on cheap, believable growth.
'The European market is on a P/E of 14 times, with predicted earnings growth of 15% this year. My portfolio has a P/E of 11.5 times, with expected earnings growth of 17%.'
Stock selection is highly systematic.
Wolstonecroft said: 'We amass large amounts of data on individual stocks. We try to buy the best stocks within a given sector, with particular attention paid to valuation and, for risk monitoring purposes, to the position in relation to the benchmark.'
The 'market realist' stance comes into play when deciding on sectoral trends.
Wolstonecroft believes the mid-April swing into technology stocks was only a short-term bounce. He said: 'Fund managers in general are warming to banks and consumer cyclicals and so we are overweight in these areas.'
Overweight sectors, as well as banks, consumer defensives, and energy include construction and pharmaceuticals, while the portfolio is underweight technology, industrials, media and insurance.
Favoured stocks include Italian oil company ENI.
Wolstonecroft said: 'This stock is on a much lower valuation than most oil companies. It is trading at 6 times price to cashflow and 4.7 times EV/EBITDA, compared with BP which is at 10 times price to cashflow and 8 times EV/EBITDA ' and yet their growth rates are similar.'
Another large cap stock in the portfolio is Irish pharmaceutical company Elan.
Wolstonecroft said: 'This company is showing growth stronger than the rest of the pharmaceutical sector and is also likely to be the beneficiary of fund managers' desire for safe earnings.'
Wolstonecroft also holds French aerospace company Zodiac.
'This company shows a history of very strong growth against the market. Earnings results posted in March exceeded analysts' forecasts and we think it will continue to grow.'
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