Another contrarian fund is ClearBridge International, which has 79% of assets in Europe. During the past five years, the fund returned 6.2% annually, outdoing 78% of foreign large blend peers.
Portfolio manager Paul Ehrlichman likes to find companies where earnings are down substantially from their peak levels. "Europe is a place where earnings are depressed and have room to grow," he says.
Ehrlichman favors high-quality businesses that are poised to turn around and gain market share. A holding is Shanks Group, a U.K. waste management company. Shanks once emphasized incinerating trash and other businesses that were struggling because of opposition due to environmental concerns. To grow, Shanks has begun refocusing, moving into growing areas, such as turning organic waste into fuel and fertilizer.
Ehrlichman also owns A.P. Moller-Maersk, a gigantic Danish shipping company. The shipping industry has suffered a downturn because of an excess supply of vessels and sluggish world trade. At a time when many competitors are going out of business, Maersk is gaining market share and reducing costs.Northern International Equity often favors stocks that have below-average prices and above-average sales growth. During the past five years, the fund has returned 5.6%, outdoing 71% of foreign large blend peers. Northern has 70% of assets in Europe. Portfolio manager Douglas McEldowney says that shares of some multinationals are depressed simply because their corporate headquarters are located in Europe. Investors figure that the companies are doomed to slow growth, even though sales may be climbing in dynamic overseas markets. One holding is LMVH MOET Hennessy Louis Vuitton (LVMHF), the French luxury brands giant. The company sells dozens of brands, including Givenchy fashion, Christian Dior cosmetics, and Bulgari jewelry. Sales have been climbing in the U.S. and emerging markets. "These brands will earn high margins for a long period of time," says McEldowney. At the time of publication, Luxenberg had no positions in stocks or funds mentioned. Follow @StanLuxenberg This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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