Partner Insight: Isaac Chebar, manager of the DNCA European Select Equity Fund, discusses the opportunities available in pharma, telecoms and energy
What is your level of exposure to certain investment themes/regions?
We're very French these days, on the ex-UK side. We are buying pharmaceuticals which is something the market does not want because they're suffering pressure from generics, biosimilars and more scrutiny from payers (governments or private payers). We have approximately 11% in pharma. And we still think energy is a place to be investing in in terms of dividends and buy backs. With regards to financials, we are underweight. Then in relation to telecommunications, we are overweight.
Are there value commonalities within the ESE Fund?
Well, we picked a lot of oil stocks in early 2016 when the market was really negative. We've been increasing our position in pharma over the last eight months because the team thinks the market is too negative about their future cash generation. Telecommunications is something that hasn't been working for the past two years, but we still believe there is operating leverage in the sector because we see a return in revenue growth and balance sheets are okay. So the commonalities are: low valuations plus they are unloved by the market. We are also keen on companies undergoing a restructure and sectors that in the future will be able to generate cash and pay dividends, but have so far gone unnoticed by the markets.
Click here to learn more about Isaac Chebar's process for picking quality value stocks in Europe