It has begun to occur to some people that there are perhaps some elements of Donald Trump’s America that will not be so great, that the Trump rally is perhaps a bit overdone, that perhaps the regulatory bonfire will be cancelled out by the trade wars and other global instabilities at the top of his international agenda. It has occurred to some of the same people that Donald Trump is president of the United States and not of Europe, and that perhaps he might wreak more havoc on the former than the latter. This is what those in the hedge fund business call an opportunity.
Fundamental valuations, however, suggest that consensus opinion on Europe may well be too negative. European equities have rarely been as cheap when compared with the rest of the world, according to Northern Trust….
This gap has spurred concentrated, bottom-up equity-focused investors to buy up shares in European-listed companies — especially those in southern Europe — that have large amounts of their business based in North America, but are still arguably penalised for being “European companies” by the market….
“When we invest in the US, it’s like fortress America but when you look at Europe, there are all these fissures, all these cracks running through the system, whether it’s the Scottish referendum, or Brexit, or Italy. There are always these breakpoints in Europe that create issues. If you’re an investor like us, it creates some really interesting opportunities.”