Cover Story -- Global
IT'S A BIG WORLD, AFTER ALL
The bull is alive and well--and not just on Wall Street. With few exceptions, bourses from Brazil to Britain are enjoying themselves in 1997. Even Tokyo's slumbering stock market has come alive.
But how should you play the rally overseas? For some answers, BUSINESS WEEK sought out four savvy international money managers: Leah Zell of Chicago's Acorn International Fund, Nassau-based Mark G. Holowesko of Templeton Growth Fund, Mark L. Yockey of Artisan International Fund in San Francisco, and Bruce B. Bee, a small-capitalization-stock maven who is based in Denver. All are bulls on Europe. And many of the stocks they like can be purchased, in dollars, through Merrill Lynch, Charles Schwab, or other brokers that handle international equities.Return to top
PLACING HER CHIPS ON OUTSOURCING OVERSEAS
The same outsourcing phenomenon that swept the U.S. over the past decade is now hitting Europe and Asia, says Leah Zell. She argues that sectors such as computer services, which have posted huge gains in the U.S., will be the rising stars of overseas markets for years to come. "If it happened here, it can happen there," declares the manager of the $1.9 billion Acorn International Fund.
Zell, a Harvard-trained historian and sister of Chicago real estate investor Samuel Zell, specializes in making gutsy calls on unpopular companies. The strategy has paid off: Acorn International returned 20.7% last year and is up an additional 5.1% through May 23. Her biggest holding is WM-data, a Swedish computer-services company that represents 2.7% of the fund's assets. When Zell started buying its shares in 1993, its profile could hardly have been lower. Today, it's recognized as a top info-tech partner to many Swedish companies, thriving in much the same way as Electronic Data Systems Corp. did in its heyday.
Another computer-services outfit that has caught Zell's eye is Atos, a French company that sells at a discount to such peers as Getronics and Sema. Helping clients rewrite software to prepare for the year 2000 and deal with a proposed single European currency is keeping Atos humming. Yet Acorn analyst Marcel Houtzager notes Atos remains "illiquid and underfollowed."
Zell's fascination with outsourcing goes beyond computer services. To Zell, privatization is also a form of outsourcing, as governments look for more efficient operators of state assets. One privatization play is Flughafen Wien, the operator of Vienna's international airport, which is benefitting from rising travel by Eastern Europeans and should pick up more business as regional air travel is deregulated and fares decline.
Several Asian issues also meet Zell's approval. Among them are Venture Manufacturing, a contract electronics maker that is based in Singapore, and Hong Kong consumer-products manufacturer Li & Fung Ltd. Both companies run assembly factories much more cheaply than customers like Sony Corp. or The Limited Inc. could manage on their own. "Specialization is being rewarded," Zell says.By Greg Burns in ChicagoReturn to top
Leah Zell's Picks
Acorn International Fund
WM-DATA (SWEDEN) $80
TT TIETO (FINLAND) 254
RHOEN KLINIKUM (GERMANY) 121
HENNES & MAURITZ (SWEDEN) 27
GETINGE (SWEDEN) 18
DATA: ACORN INTERNATIONAL FUND, BLOOMBERG FINANCIAL MARKETS
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