(Written by Rebecca Lipman. List compiled by Alexander Crawford. Institutional data sourced from Fidelity.)
EU leaders are imposing waves of spending cuts and tax hikes to show investors that they’re serious about improving their balance sheets and to encourage them to buy euro zone sovereign debt – but is this wise?
Reuters’ Carmel Crimmins and Gavin Jones note, “the austerity zeal risks tipping the continent back into recession… meaning further austerity is required.”
“You don’t cut your way to growth,” adds Stephen Kinsella, professor of economics at the University of Limerick.
So where’s the confidence fairy to correct this negative cycle? That was supposed to come from the EU Summit in Brussels last week. Except it failed to instill much confidence at all.
Italy sold 3 billion euros of 5-year bonds at a 6.5% yield, “doing little to dispel concerns about the country’s longer-term financing sustainability.” The 5-year yield is at its highest in 14 years, up from 6.30% just a month ago.
The Rome-based Treasury sold the bonds at a 6.47% yield, up from 6.29% at the last auction on November 14.
The EU expected stronger demand and lower yields, but shouldn’t have been surprised by the less-than-enthusiastic response from global investors.
“Obviously 5-year funding rates of 6.5 percent are unsustainable and the cost of funding will become a crucial factor in the first quarter of next year,” said WestLB rate strategist Michael Leister.
Reuters reports benchmark 10-year Italian yields were flat at 7.13%, with yields on the September 2016 bond auctioned almost 13 basis points lower on the day at 6.73%.
Many investors believe that if Europe hold together and pulls through, there should be considerable upside for stocks.
With that in mind we created a universe of European companies trading on the US market exchange, and looked for names with the most significant levels of institutional buying in the current quarter.
It seems institutional buyers, such as hedge funds, think these names have much to gain from a rebound – or that they might simply power through whatever comes their way. Do you agree?
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1. VimpelCom Ltd. (VIP): Operates as an integrated telecommunications services provider, offering voice and data services through a range of wireless, fixed, and broadband technologies. Market cap of $12.52B. Country: Netherlands. Net institutional shares purchased over the current quarter at 19.0M, which is 6.64% of the company's 286.26M share float.
2. ICON plc (ICLR): Provides outsourced development services to the pharmaceutical, biotechnology, and medical device industries primarily in Ireland, the United States, and rest of Europe. Market cap of $966.73M. Country: Ireland. Net institutional shares purchased over the current quarter at 3.2M, which is 5.51% of the company's 58.10M share float.
3. Ternium S.A. (TX): Engages in manufacturing and processing a range of flat and long steel products for construction, home appliances, capital goods, container, food, energy, and automotive industries. Market cap of $3.49B. Country: Luxembourg. Net institutional shares purchased over the current quarter at 2.3M, which is 4.71% of the company's 48.88M share float.
4. ASM International NV (ASMI): Engages in researching, developing, manufacturing, marketing, and servicing equipment and materials used to produce semiconductor devices. Market cap of $1.43B. Country: Netherlands. Net institutional shares purchased over the current quarter at 1.9M, which is 4.33% of the company's 43.89M share float.
5. Sensata Technologies Holding NV (ST): Develops, manufactures, and sells sensors and controls primarily in the Americas, the Asia Pacific, and Europe. Market cap of $4.74B. Country: Netherlands. Net institutional shares purchased over the current quarter at 3.1M, which is 4.15% of the company's 74.71M share float.
6. Altisource Portfolio Solutions S.A. (ASPS): Provides services related to real estate and mortgage portfolio management, asset recovery, and customer relationship management primarily in the United States. Market cap of $1.18B. Country: Luxembourg. Net institutional shares purchased over the current quarter at 540.4K, which is 3.85% of the company's 14.04M share float.
7. Intercontinental Hotels Group plc (IHG): Owns, manages, franchises, and leases hotels and resorts. Market cap of $4.82B. Country: United Kingdom. Net institutional shares purchased over the current quarter at 10.0M, which is 3.56% of the company's 281.09M share float.
8. Tornier N.V. (TRNX): Operates as a medical device company that designs, manufactures, and markets devices for joint replacement and soft tissue repair that enable surgical specialists to improve patients' lives by restoring motion and physical vitality. Market cap of $701.18M. Country: Netherlands. Net institutional shares purchased over the current quarter at 458.6K, which is 3.53% of the company's 13.00M share float.
9. Mettler-Toledo International, Inc. (MTD): Manufactures and supplies precision instruments and services worldwide. Market cap of $4.61B. Country: Switzerland. Net institutional shares purchased over the current quarter at 945.7K, which is 3.06% of the company's 30.86M share float.
10. Star Bulk Carriers Corp. (SBLK): Operates as a shipping company providing seaborne transportation solutions in the dry bulk sector worldwide. Market cap of $81.16M. Country: Greece. Net institutional shares purchased over the current quarter at 1.8M, which is 2.97% of the company's 60.56M share float.