Peripheral bets power small cap specialist's returns
Metzler’s Lorenzo Carcano adds to Italian holdings after seeing strong performance in his southern European bets.
by Chris Sloley on Jan 28, 2013 at 09:05
Metzler Asset Management’s Lorenzo Carcano is adding to his southern European exposure following strong performance by his Italian and Portuguese positions, the small cap specialist has revealed.
The former Citywire AAA-rated manager said he has purchased new shares in Italian insurance company Fondiaria-Sai off the back of an encouraging display by other non-core Europe stocks in his €218 million Metzler European Smaller Companies fund.
Carcano has 50% of his fund invested in the eurozone region and said he had been pleasantly surprised by the strength of the performance in its beaten down areas.
‘The fund's winners included stocks from the eurozone periphery which were badly hit by the sovereign debt crisis and are now profiting from a slight rebound,’ he said in his January investor commentary.
‘Shares in the Portuguese Banco Espirito Santo climbed 60% and those of the Spanish construction company Obrascón Huarte Lain 22%. Shares in the Italian company YOOX (internet retailer for high-quality clothing, +20%) and Piaggio (producer of motor scooters, +15%) also posted sizeable gains.’
This display, Carcano said, helped drive the investment in Fondiara-Sai, which he said shows potential despite heavy losses. ‘We used the low valuation as an occasion to buy,’ he said.
Meanwhile, Carcano made room for the exposure through selling one Italian name – luxury goods retailer Ferragamo, which he said had limited future price potential – and also a position in German company Rheinmetall.
‘We unable to see any good perspectives for the company at the moment, whether in the armaments or in the automobile segment,’ Carcano said.
Over five years, the Metzler European Smaller Companies fund has returned 9.57%. This compares to its Citywire benchmark, the MSCI Europe Small Cap TR EUR, which rose 7.16% over the same period.
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