This is a ‘historical point for buyers’, says top equity manager

French value manager Jean-Charles Mériaux of DNCA Finance is so confident of the historical buying opportunity created by last summer’s market drop he has depleted his cash reserves to its lowest level in over five years.

The manager of the €1.4 billion Centifolia fund, has been shopping in the past few months and seizing his chance to get the best deals around.

‘I recognise that there are still many uncertainties but the market priced in the worst and the worst has not happened. Today we can say that all those that sold since the 20^th August are now losers.’

‘When everyone was howling with the wolves in August, I think it was expected that an equity manager would adopt a more contrarian view. You have to keep a cool head,’ said the Euro Stars A-rated manager.

‘In September everyone adopted a very negative outlook. Their actions have in turn offered me entry points. We are at a historical point for buyers. When I look around the market I am seeing companies that are generating huge amounts of cash.’

Far from throwing caution to the wind, Mériaux insists the reason he brought his cash levels to 2% going into 2012, his lowest since 2007, is because many big groups have hit his valuation bracket. He has also always maintained a rule to have a 50% allocation to defensive stocks.

‘I have never changed my management style. I always focus on the fundamentals and my portfolio is guided by the macro outlook,’ says Mériaux.

‘Since 1998 I have looked for companies valued at between 10-13 times PER. Beyond a PER of 13 times I get very ill at ease because for me it is too high to offer rapid returns.’

The French market is an ideal hunting ground for these companies, says Mériaux, as the country holds the greatest number of the Eurozone’s largest companies.

One of these is French healthcare company Sanofi, which through its foreign investments has become one of the biggest pharma groups present in the emerging markets.

The French company is one of his top five holdings which also includes stocks like Total and construction group Vinci. He also recently added a bank to his portfolio after actively avoiding the sector since the crisis.

‘Europe is in crisis and we don’t really seem to know how to manage it. But I have in front of me solid companies that are generating high cash flows and high dividends.’