Portfolio Manager Perspectives

Jeff Benjamin

There's green to be made in grey areas of Europe: Evermore's Marcus

Crisis on continent obscuring good investment values; ‘panic mode'

Sep 22, 2010 @ 10:43 am

By Jeff Benjamin

As nervous investors have reduced their exposure to Europe over the past few months, some plays on the continent have become increasingly attractive, according to David Marcus, manager of the Evermore Global Value Fund Ticker:(EVGIX) and Evermore European Value Fund Ticker:(EVEIX).

“Right now we're predominantly in developed Europe, because everybody's in panic mode and that's when we find the best opportunities,” he said.

The global portfolio is 45% allocated to European stocks, with the next highest allocation being the United States at 25%.

Mr. Marcus, who returned the mutual fund business in January after a decade managing hedge fund assets, uses a deep-value investing approach that requires the identification of a series of catalysts that will drive a stock's price up to fair-value range.

“We're looking for a whole process of changes, including things like new management or a corporate restructuring,” he said. “Usually when there's a crisis, investors don't want to even look at a company, but we think there are a lot of opportunities in those kinds of grey areas.”

One example is DIRECTV (DTV), which Mr. Marcus described as "one of the

few satellite pay TV operators that is growing right now."

The company's stock price has gained more than 25% this year through Monday, which compares to a 2.4% gain by the S&P 500 Index over the same period.

The catalyst driving the stock, according to Mr. Marcus, is balance sheet restructuring designed to take advantage of the company's cash flow.

Mr. Marcus likes to keep his portfolios concentrated to about 40 names and strives to keep the annual turnover rate below 20%.

Beyond that, he'll go anywhere in the world and anywhere on a company's capital structure to gain an advantage.

Portfolio Manager Perspectives are regular interviews with some of the most respected and influential fund managers in the investment industry. For more information, please visit InvestmentNews.com/pmperspectives.

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