Unafraid Of Heights On The German Exchange
By some estimates, the German stock market is getting to be a pretty scary place to invest. The DAX index is up about 45% so far this year, and the 30 stocks in it are trading at 24 times estimated 1997 earnings. But this is no time to sell, says Elisabeth Weisenhorn, whom many consider Germany's top mutual-fund manager. She's fully invested and thinks there's room for many stocks to go higher. "We're still bullish on this market," she says.
Don't bet against her. Weisenhorn has consistently outperformed the DAX for the last decade, even while she has taken on more funds. Through July 18, according to researchers Micropal Ltd., two of the five funds she now manages for Frankfurt-based DWS-Group, a unit of giant Deutsche Bank, rank among the top 10 German funds with assets of more than $55 million.
GOOD PROSPECTS. Her top performer, Provesta, a small-to-mid-cap fund with $1 billion in assets, returned 48.4% through July 18 and ranks seventh among funds investing in Germany. Her other two shining stars are blue chip Ring Aktienfonds DWS, which is up 48.1%, and the $1.2 billion DWS Deutschland, a mid- to large-cap fund, which is up 45.5%. Both ranked among the top four German funds over the last three years. Weisenhorn manages Investa, up 44.3%, and co-manages the Top 50 Europe fund, up 32.9%. DWS applied to the Securities & Exchange Commission in June to list some of its funds, including a version of Investa, in the U.S.
Weisenhorn's bullishness reflects a streak of optimism about the German economy. She cites the weak mark, low interest rates, and good earnings prospects. The stock market is also getting a boost from local investors worried that pension reform is likely to cut into their retirement funds. Until recently, about 80% of German mutual-fund investments were going into bond funds. This year, Union Bank of Switzerland's Frankfurt office estimates that two-thirds of new German investments are going into equity funds. A big jump in foreign buying is also adding liquidity.
Beyond her macroeconomic perspective, Weisenhorn is known for a degree of corporate spadework unusual by German standards. Her diligence has been rewarded. Many of the stocks she likes today already have had a good run. She still owns Qiagen, a Dusseldorf biotech company, even though its shares have quadrupled in the past 13 months. Despite an earnings scare that temporarily clobbered Hoechst in March, she believes that the chemical giant will succeed in refocusing on pharmaceuticals. A longtime backer of German software giant SAP, Weisenhorn used a dip in the price last October to add to her position. Since then, the share price has doubled. Other favored stocks include Metro, a big retailer, and Fresenius, a medical-services outfit.
The danger now is that she may be sticking too long with past winners--or that the market boom may play itself out. Frank Fischer, Micropal's managing director in Germany, notes that some market strategists justify current valuations only by factoring in German tax reforms that would cut corporate levies and increase profits. Yet any reform is unlikely to be enacted before 1999, if at all.
HANDSOME PROFIT. Still, the 41-year-old Weisenhorn has made some gutsy bets pay off before. She came to prominence in 1987 because she was heavily into cash at the time of the October crash. Then, in 1989 when she was managing a worldwide fund for DWS, she went heavy on German stocks in a strong market and her fund gained 26%, more than double the return in world markets. She made another prescient call in 1993, when she loaded up on troubled heavy-industry stocks, such as steelmaker Kluckner-Werke and bearing maker Kugelfischer, during a steep downturn--and later sold out for a handsome profit. "What distinguishes her is her commitment to being a very active manager," says Petra Zamagna, head of investor relations at Hoechst. That, and the courage to trust the market when others doubt it.