Bernstein lists 44 European names for its portfolio, cites two value trades, one defined across the market and the other within industries.
- Highlights correlations are coming off peak levels, falling in step with declines in implied volatility, “this could create a tactical case in favor of stock selection in short term”
- Says spread of valuations across market and within industries is close to historic extreme levels even after a month of Value outperformance
- Says analysts are downgrading value names at “unprecedented pace;” no sign that the recent Value bounce has been incorporated into consensus estimates
- Portfolio includes:
- Materials (sector weight: 10%; sector recommendation: Overweight): Rio Tinto, Antofagasta, Anglo American, HeidelbergCement, Akzo Nobel
- Industrials (14%; Overweight): Fraport, Deutsche Post, Randstad, EasyJet, Airbus, Siemens, Volvo B
- Consumer Discretionary (12%; Neutral): TUI AG, Peugeot, Kingfisher, WPP, LVMH
- Consumer Staples (5%; Underweight): Sainsbury, Pernod Ricard, Henkel
- Energy (11%; Overweight): Total, Shell, BP, GALP
- Banks (15%; Overweight): Nordea, Intesa, BNP, SocGen, Standard Chartered
- Insurance (4%; Underweight): Allianz, Legal & General
- Other Financials (5%; Neutral): Aberdeen, Amundi
- Healthcare (12%; Underweight): Novartis, AstraZeneca, Bayer, Smith & Nephew, Straumann
- Technology (4%; Neutral): Nokia, SAP
- Telecoms (8%; Overweight): Orange, TeliaSonera, Vodafone, Deutsche Telekom