Monday, April 4, 2011

Words of Wisdom from Vontobel Asset Management: Picks in the BRICS (JVIAX; HIEMX)

These guys run a pretty solid operation with a growth at a discount focus. Longer term readers may remember our posts on the vice stocks proxied by VICEX, here's some more.
From Forbes:
...Rajiv Jain, Portfolio Manager at Vontobel Asset Managementin New York manages over $2.2 billion in two separate international equity funds, Virtus Foreign Opportunities (JVIAX) and Virtus Emerging Markets (HIEMX). In Brazil, he likes the sin stocks.

“Go after Souza Cruz (CRUZ3.BR)  in Brazil. It’s a cigarette monopoly that paid out almost 14 times earnings with a 6% dividend yield, and still has high single digit earnings. How many companies do you know that can pay out all their earnings and still grow above inflation? You can buy these guys anytime if you take a 3-5 year view. Its an evergreen,” he says.
We don’t own Vale (VALE) or PetroChina (PTR) or Petrobras (PBR) or anything in Russia.  I almost hate to say it, but we have no energy holdings and no basic materials, but we are still overweight Brazil.” — Rajiv Jain, portfolio manager, Vontobel Asset Management.
In India, Jain likes HDFC Bank (HDB) and Housing Development Finance Corp, which is traded in Mumbai.

“We’ve owned HDFC for six or seven years. You can hold this for a long time. It’s a relatively new company; been in the market for 16 years and still compounding growth in the high teens . They have room to grow because their market share is only 4%. A lot of things don’t work in India, but one thing that works well is the banking system. Look at 1997 Asian Tigers or 2001 or recently in 2008 — no crisis. No massive lending bubble and no derivatives crisis. The Reserve bank of India is good. We have a lot more trust in Brazilian and Indian banking system then our Federal Reserve. Combined with Housing Development Finance Corp, those two names make up around 10% of our portfolio.”...