You must operate with a ‘never say never’ approach when it comes to Europe and you cannot exclude the peripheral markets when looking for value, according to Mandarine manager Diane Bruno.
Despite operating in the much maligned European equity space, Bruno said they are not put off by peripheral European nations and issues within the eurozone.
This is because they are finding companies which have little or no dependence on the domestic market and strong links to emerging world growth. This has allowed them find growth names in markets such as Italy, Spain and Portugal.
‘With the companies we own, we know that these companies are not locally-facing,’ she said. ‘For example, in Italy we own a company which runs websites for luxury brands which are aimed at the Chinese consumer. They have 20% of their operations in Italy but it is mainly looking elsewhere.’
'Never say never'
They operate what Bruno (pictured) calls a ‘never say never’ approach – which doesn’t’ exclude any European market. She said they are not completely immune from issues in the eurozone but have the flexibility to go where they please.
For example, she has a strong position in Spanish meat casings specialist Viscofan, as well as minor positions in other Spanish names.
‘If we were worried about Spain exiting the eurozone, for example, we would cut our exposure but all of these internationally-focused names have performed quite well since the beginning of the year,’ she said.
‘We know that we have careful at the end of the day, we do not have an overweight to this style and we are really cautious in our approach.’
Her comments echo those of fixed income manager Tatjana Greil-Castro of Muzinich, who earlier this year urged investors not to cast all companies operating in the eurozone in the same light.
But avoid the Greek tragedy
Despite her statement commitment to the troubled region, Bruno said Greece is a law unto itself and she has removed all exposure to the nation from her portfolio.
‘We did have a Greek company in the portfolio but we decided to sell out at the start of the year as 2011 was a very difficult year.’
‘We don’t want to be exposed to Greece, even if the company there operates outside Greece, it is not something we want to be exposed to. This is simply because we don’t know what is going to happen there.'
At present, Bruno's three largest selections are UK defence firm Babcock Group (3.87%), Dutch digital security firm Gemalto (3.54%) and Austrian plant engineering company Andritz (3.30%). Although Spanish, Italian and French names feature heavily in her top 10 holdings.
The Mandarine Unique Small&Mid-Caps fund has returned 25.4% in euro terms since its launch. Over this period its benchmark, the MSCI Europe Small Cap TR, has risen 11.7%.
Bruno is set to feature in the June 2012 issue of Citywire Global magazine in the Managers to Watch section.