Europe's woes mask solid investment plays, say money managers

The large-scale sovereign-debt issues facing parts of Europe are no reason to avoid the entire region, according to a panel of foreign-stock portfolio managers speaking at the Morningstar Investment Conference in Chicago. “European valuations are more intriguing than they’ve been in years,” said Brent Lynn, manager of the Janus Overseas Fund (JDIAX) and the Janus Aspen Overseas Fund (JAIGX). “I don’t want to downplay the challenges there, but some companies are being indiscriminately hurt,” he added. Mr. Lynn spoke on a panel about foreign-stock investing along with Wendy Trevisani, manager of the Thornburg International Value Fund (TGVAX), and Mark Yockey, manager of the Artisan International Fund (ARTIX), Artisan International Small Cap Investor Fund (ARTJX) and the Artisan Global Equity Fund (ARTHX). Ms. Trevisani described Europe as “one of the cheapest areas” right now, adding that “there are a lot of stocks that have been unfairly penalized by being domiciled in Europe.” For example, Ms. Trevisani said, she recently added German automaker Volkswagen AG (VKW) to her portfolio. Unrelated to the European debt issues, Ms. Trevisani admitted to unloading her shares of British oil giant BP PLC immediately after the company’s deep-water oil rig exploded in the Gulf of Mexico two months ago. “We had been building a position in BP for six to 12 months, and we started getting out of the position as soon as the first news reports came out,” she said, even though she acknowledged that the initial reports suggested it was not going to be as big an issue as it has turned out to be. “At first, the reports were that it was not a big deal, and they were just going to plug it up with golf balls, but we figured the environmental mess and everything else was enough for us to get out,” she said. “We were completely out of BP within three days after the spill.” In terms of emerging markets, the panelists agreed that it is no longer possible to lump all such countries into a single category, but there was a general favoritism toward China, India and Brazil. “We like China a lot because it’s a country with a fixed currency, rising incomes, and they’re building infrastructure,” Mr. Yockey said. Mr. Lynn described India as his favorite emerging market. “I’m continually impressed with the entrepreneurial spirit that I see in India,” he said.