Invesco European Growth Fund's Top 5 1st-Quarter Trades
- By James Li
The Invesco European Growth Fund (Trades, Portfolio), part of Atlanta-based Invesco Ltd. (NYSE:IVZ), disclosed this week that its top five trades during the fiscal first quarter included the elimination of its SAP SE (NYSE:SAP)(XTER:SAP) holding, an increase to its Gamesys Group PLC (LSE:GYS) holding and new positions in Ashtead Group PLC (LSE:AHT), CRH PLC (LSE:CRH) and Technogym SpA (MIL:TGYM).
According to its website, the fund seeks long-term capital appreciation by investing in a diversified portfolio of reasonably priced, quality companies in the European region. As of Jan. 31, the fund's $1.03 billion equity portfolio contains 57 stocks, with four new positions and a turnover ratio of 4%.
The fund's top four sectors in terms of weight are industrials, financial services, health care and consumer staples, representing 25.07%, 18.87%, 12.33% and 10.93% of the equity portfolio.
SAP
The fund sold 101,180 shares of SAP (XTER:SAP), trimming 1.23% of its equity portfolio. Shares averaged 102.35 euros ($122.22) during the quarter ended Jan. 31; the stock is fairly valued based on Tuesday's price-to-GF Value ratio of 0.97. Based on GuruFocus estimates, the fund gained approximately 33.78% on the stock.
Founded by former International Business Machines Corp. (IBM) employees, Germany-based SAP provides database technology and enterprise resource planning software to enterprises around the world. GuruFocus ranks SAP's profitability 9 out of 10 on several positive investing signs, which include a 4.5-star business predictability rank, a high Piotroski F-score of 7 and profit margins that outperform over 88% of global competitors.
The fund said in its shareholder letter that it exited the holding "due to deteriorating earnings-quality-valuation metrics" based on the fund's internal research. GuruFocus ranks SAP's financial strength 6 out of 10: Interest coverage and debt ratios underperform over 60% of global software companies even though the company has a strong Altman Z-score of 4.51.
Gurus with holdings in SAP's U.S.-based shares (NYSE:SAP) include Ken Fisher (Trades, Portfolio)'s Fisher Investments, Chris Davis (Trades, Portfolio)' Davis Select Advisors and Sarah Ketterer (Trades, Portfolio)'s Causeway Capital Management.
Gamesys
The fund purchased 525,953 shares of Gamesys (LSE:GYS), boosting the position 235.9% and the equity portfolio 0.89%. Shares averaged 11.67 pounds ($16.04) during the first quarter; the stock is significantly overvalued based on Tuesday's price-to-GF Value ratio of 2.15.
According to GuruFocus, the U.K.-based online gaming company's operating margin and three-year revenue growth rates outperform over 82% of global competitors, suggesting good profitability.
Ashtead Group
The fund purchased 179,701 shares of Ashtead Group (LSE:AHT), giving the position 0.88% weight in the equity portfolio. Shares averaged 33.79 pounds during the first quarter; the stock is significantly overvalued based on Tuesday's price-to-GF Value ratio of 1.62.
GuruFocus ranks the U.K.-based equipment rental company's profitability 9 out of 10 on several positive investing signs, which include a five-star business predictability rank and profit margins outperforming over 87% of global competitors.
CRH
The fund purchased 209,309 shares of CRH (LSE:CRH), giving the position 0.84% weight in the equity portfolio. Shares averaged 30.95 pounds during the first quarter; the stock is modestly overvalued based on Tuesday's price-to-GF Value ratio of 1.22.
The Dublin, Ireland-based company manufactures a wide range of materials for building and construction projects. GuruFocus ranks CRH's financial strength 5 out of 10: Although the company has a solid Piotroski F-score of 6, interest coverage and debt ratios underperform over 60% of global competitors.
Technogym
The fund purchased 846,247 shares of Technogym (MIL:TGYM), giving the position 0.84% weight in the equity portfolio. Shares averaged 8.76 euros during the first quarter; the stock is fairly valued based on Tuesday's price-to-GF Value ratio of 0.92.
GuruFocus ranks the Italian fitness equipment manufacturer's profitability 7 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7 and an operating margin that has increased approximately 17% on average over the past five years and is outperforming over 88% of global competitors. Despite this, three-year revenue growth rates are outperforming just over 70% of global leisure companies.
Disclosure: No positions.
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This article first appeared on GuruFocus.
