You are here: Home - Investing - Experienced Investor - News -

Where are fund managers looking for Black Friday bargains?

Written by:
Spent time today looking for a new fridge, TV, or some killer heels? As shoppers head to stores and online to try and unearth bargains this Black Friday, five investment managers outline areas of the market they believe are currently undervalued.


Richard Robinson, manager of the Ashburton Global Energy fund, said: “Assuming OPEC follows through with the majority of its planned production cuts, this is unequivocally bullish for the oil sector – particularly US shale producers. Short-cycle shale producers in the US will be called upon to meet global demand growth, which is slated to be about 1.2 million barrels per day over the next year. We have already started seeing a slight upturn in US rig counts – primarily in the Permian basin. Once oil inventories rebalance to more normalised levels – which we believe will progressively occur over the next 12 months – it is not inconceivable that the combination of undersupply, normalised inventories, historically low OPEC spare capacity and an uncertain US policy in the Middle East should lead to the return of an oil price risk premium.”


Stuart Mitchell, CIO at SW Mitchell Capital, said: “Post Brexit, a number of companies have been consistently more upbeat than many had expected. In particular, UK housebuilders have made a number of encouraging comments. Taylor Wimpey’s management, who were highly nervous after the vote, noted the weeks following were ‘better than the best hopes we could have had’. Apart from prime central London property – a niche market with issues long in the making – Taylor Wimpey informed us activity is as strong as or stronger than before the referendum. We remain significantly invested in the UK housebuilding industry, which continues to enjoy buoyant demand and limited cost inflation.”

European high yield bonds

Mike Della Vedova, manager of the T. Rowe Price European High Yield Bond fund, said: “Has the US high yield market’s outperformance of the European market run its course? The European Central Bank (ECB) remains very much in easing mode, which is supportive. The ECB continues to ease monetary policy through large scale asset purchases, and while it is possible the Bank will begin tapering its buying in 2017, it is likely to remain accommodative. By contrast, it is likely the US Federal Reserve will raise interest rates for the first time this year in December, and there is the potential for further rate rises next year, particularly if the pro-growth policies materialise and cause inflation to rise. Such an environment could be challenging for US high yield, although this could be tempered if fiscal stimulus extends the credit cycle in the world’s largest economy. In all, fundamentals and technicals underpinning European high yield remain sound. Europe remains at an earlier, more credit-friendly part of the economic cycle than the US, with inflation low and growth moderate.”

Italian financials

Mike Clements, manager of the OYSTER Continental European Selection fund, said: “A part of the market which has been particularly weak this year and where we have been hunting for ideas is in Italian financials. Uncertainty around the upcoming referendum on constitutional reform, as well as the struggling banking system attracts most attention, especially with Monte Dei Paschi and Unicredit looking to raise about €15bn in the coming months. However, banks aside we are seeing attractive opportunities in the broader sell-off. We believe the best positioned businesses are the loan servicers, such as Eurocastle, and asset managers including Anima. Eurocastle is the leading NPL servicer in Italy and will invariably play a key role in managing the enormous stock of NPLs in the country. Anima is the largest independent asset manager in Italy, and its shares have been under pressure mainly due to the troubles of some of its distribution partners, including Monte Dei Paschi. However, at current levels we feel much of the risk is priced in and actually there is considerable upside from its developing relationship with Poste Italiane.

With polls suggesting that the Italians could reject the proposed reforms in the referendum on 5 December, we fully expect more uncertainty. This suits our contrarian style as it could throw up opportunities to buy good companies like these at attractive valuations.”

Real estate

Vince Childers, senior vice president and real assets manager at Cohen & Steers, said: “We recently increased our position in real estate stocks, where valuations fell to the most inexpensive level in five years. Our US REITs are positioned for modestly higher interest rates and growth. Historically, REITs have generally performed well amid such conditions – even in the face of higher inflation. As for the UK, we remain cautious toward London office and residential companies, due to the sector’s vulnerability to economic damage resulting from the Brexit vote, and we have virtually no direct exposure allocation to those sectors. Instead, we favour U.K. companies we believe exhibit more defensive or structural growth characteristics. These include landlords in sectors such as e-commerce logistics, student housing and health care.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Autumn Statement: Everything you need to know at a glance

Yesterday Chancellor Jeremy Hunt made his first fiscal statement in the role, outlining a range of tax measure...

End of Help to Buy: 10 alternatives for first-time buyers

The deadline for Help to Buy Equity Loan applications passed on 31 October. If you’re a first-time buyer who...

Moving to an energy prepayment meter: Everything you need to know

As households struggle with the soaring cost of energy, tens of thousands of billpayers are expected to move o...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week