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Investors should look for opportunities in the underappreciated region of Europe, according to fund manager Sean Peche, who said there are some “very attractively priced” companies in the region.
Europe has fallen from grace, Peche of Ranmore Fund Management told CNBC’s Silvia Amaro, and investors have been distracted by Donald Trump’s election victory in the United States.
“At the same time that Europe was struggling, there was this Trump euphoria,” Peche said. “So everyone has rushed to invest in the United States… But looking for the latest and greatest is usually not a good way to make money.”
Peche played down investor concerns about France, which, along with Germany, has been mired in political turmoil in recent weeks. French President Emmanuel Macron named Francois Bayrou his new prime minister last week following the overthrow of Michel Barnier’s government.
Macron called early elections in June that produced a result without a clear majority, leading to months of political chaos and gridlock.
But Peche remains unperturbed. “Maybe the euro will collapse, or probably not. And the companies we own have very attractive prices,” he added.
These stocks include the French bank BNP Paribas – which, he noted, has steadily increased its book value (or net worth) – and the Dutch investment bank ABN Amro, which has a dividend yield of 10.2%. “That’s very attractive,” Peche said.
Looking at the UK, the fund manager said that “attractive” stocks such as Associated British foodsowner of retail giant Primark, were also being ignored by investors.
“Primark is doing very well. It’s a nice, diversified business with a great management team. I’m not going to wake up tomorrow and find that the management team has done something stupid,” he said.
“They are attractively priced. We are getting a good dividend. They are buying back shares, but it is not popular because it is a mid-cap company and listed in the UK.”
Eyes on the toymaker
Peche is optimistic about mid-cap companies on the other side of the Atlantic, such as the American toy giant. Mattel.
With household brands like Barbie and Hot Wheels under its umbrella, the toy maker has diversified beyond its core products.
Mattel’s management team has “changed the business in such a way that debt is now very manageable, and they have launched a billion dollar buyback”Peche said.
The launch of a new animated Barbie series on Netflix in November and a second docuseries in September charting Mattel’s rise gives the toy maker, currently valued at about $6.2 billion, “growth potential,” he said. Peche.
Mattel saw a sharp increase in Barbie toy purchases after the smash success of the 2023 film “Barbie,” the highest-grossing film of that year, grossing more than $1.4 billion worldwide. It has also produced toys for hit films such as “Moana” and “Wicked,” although the latter ran into trouble and was forced to withdraw its line of character dolls after a misprint linked to a pornographic website.
In October, both Mattel and competitor Hasbro lowered their year-end forecasts as toy sales fell during the third quarter. Mattel said it expects sales for the final three months of the year to be “comparable to slightly lower” from its previous guidance update.
— CNBC’s Kristian Burt contributed to this report.
