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Jupiter’s Guy de Blonay: How I am playing banks’ great restructuring
by Elsa Buchanan on Sep 17, 2013 at 07:03
Additionally, he points to Standard Chartered, which at 1.3 times book is focusing ‘too much’ on revenue growth as one he is avoiding, along with HSBC, which is targeting revenue growth through acquisitions.
In the growth silo, which he has dramatically reduced in the last three months to 15% of the portfolio, he has slashed his emerging markets exposure from 25% to 5%, cautiously avoiding Chinese banks and the Brazilian and Spanish domestic markets on the back of concerns around the pace of QE tapering.
One growth theme de Blonay is playing is financial transaction services with companies such as Visa, which he says has gone from 12 to 20 times earnings per share (EPS) growth. Monetise and Paypal are also key holdings.
‘Those are the companies of tomorrow,’ he added.
He also favours companies providing credit card security, including French company Gemalto, which has been performing well in the wake of the forthcoming launch of the new iPhone for which it is rumoured to provide digital print options.
On the yield side, De Blonay, who is focusing on companies ‘that have shrunk and are focusing on their best assets’ providing excess capital to the balance sheets, has upped his position to 20% on the back of his emerging market reduction.
The fund has returned 31.82% over 12 months compared to a 35.92% rise in the FTSE All World Financials index. Over three years, the strategy has returned 10.04%, compared to the FTSE AW Financials’ 32.23%.
Drivers of performance have come from an early move out of emerging markets and Japan this spring, in which he now only holds 5%.
Diversification with small holdings – the portfolio has not held more than 3% in one given stock for over three years – was ‘key to not underperforming’, he said.
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