Comgest does not have a sectoral approach

Where is Europe going The stock market, which prejudges nothing, goes in the right direction. It is the principled belief shared by the big four managers, all experts in European values, gathered on 24 October in the Louvre management initiative and "echoes". It's Laurent Dobler, specialist of European in Comgest values, Guillaume Laconi, Manager European in Neuflize OBC average Asset Management, Isabel Lévy, Director of management in Metropole management, and Estelle Ménard, Manager shares European Credit Agricole Asset Management. Here are their (good) reasons to believe that the European actions in the coming months. And which... because, for them four, the "stock picking" (case by case) is mandatory.

What are the prospects for growth in the United States and what are their consequences for Europe

ISABEL LVY markets are again very high since the trough in 2003 and it seems that they overcame many disturbances of the month of May 2006, which feared a collapse of the US growth. I note that long-term investors are faced with long remaining very low rates, even if they have experienced a recent rebound. These rates do not attractive investments in long-term bonds. Us real estate assets are currently at the top and begin to decline. The situation therefore began to resemble that which prevails in Europe, the Germany except. With the Japan, the Germany is one of the few countries in the world where real estate is not at its highest level. With the growth of the profits of companies in 2005 and 2006, actions remain the most interesting investment for long-term investors.

ESTELLE MNARD. economic growth is heavily driven by emerging countries, and especially the China. Concerns about us growth have exaggerated the decline and the turbulence of May 2006 were well digested by the markets. The prospects for Europe are optimism and macroeconomic indicators have stabilized at high levels. As a result, the equity markets should not be affected negatively. Our view, the shares remain attractive to other investments. Valuation multiples are reasonable, the results of the companies remain well oriented, liquidity are important and they are waiting for investment. All these elements are positive for equity markets.

LAURENT DOBLER. we don't do macroeconomic forecasts. We simply that global GDP grew unusually long way during thirteen consecutive quarters. The American consumer, which has been at the heart of a sort of global Keynesian stimulus appears to give signs of shortness of breath and I hope that this downturn will be mild. We remain cautious with regard to cycles. It is true that the equity markets seem cheaper, however, margins remain at levels historically very high. It is therefore likely that growth is amoindrira and will then need to be more selective.

Currently, investment flows appear to be favourable and the December to February period should be beautiful. This you encouraged it to increase your rate of investment during this period

LAURENT DOBLER. style "growth" has not been very popular since 2002 and we have no problem of recovery. Titles rather were less than their profits. In 2002, we were 26 times profit against 19.5 times today. Assessments of growth securities do us therefore not of major concern. At this time, PER which are higher than 20 times are considered expensive. This mode is appropriate for us, because this allows us to buy rather good business market experiencing strong developments and deserve higher per.

What is your investment rates

LAURENT DOBLER. our investment rate is close to 100.

GUILLAUME LACONI. ours is 90.

ISABEL LVY our investment rate is about 93. We do not work as "allocateurs" asset but as pure "producers" of actions. Seasonality and flows do not influence our management process.

ESTELLE MNARD the thematic team Europe, the investment rate is 100.

Could you tell us what are your areas of choice today

ESTELLE MNARD with regard to European portfolios on which the team manages the sectoral allocation, we reason in terms of macro-secteurs and distinguish the defensive sectors, cyclical sectors and financial values. Since about a month, we we repositionnons on the cyclical sectors, including industrial values which we believe they have an interest in the assessment scholarship courses. This repositioning is done at the expense of some defensive values such as current consumption and distribution. Thus, we sous-pondérons the defensive sectors, with still a preference for public services and are neutral on the pharmacy sector.

ISABEL LVY our approach is absolutely not sectoral. We work by title, in a "bottom-up" manner, which gradually led us away from cyclical values as a whole. We are not working according to a geographical approach. Today, a posteriori, we are generally absent from oil values, values related to raw materials and the "utilities". We feel that the valuations of these companies are exaggerated.

LAURENT DOBLER. Comgest does not have a sectoral approach. We are looking for relief in areas which develop, what we call our "mega-trends". To take advantage of the aging of the Western population, we are concerned at the pharmacy, cosmetics and nutrition. We have also identified opportunities in the "outsourcing" (Sodexho for catering) and Securitas Security and in the field of "low cost", including (Ryanair in air transport and Iliad in access cheap broadband).

GUILLAUME LACONI. we manage a Fund of "stock-picking" and our sector movements arise before any thing of the choice of values that we carry out title by title. Today, we are still relatively present say industrial securities.

Could you tell us about some of the investments that you make at this time and give us the names of three values that you love well

ESTELLE MNARD. I won't talk about the European portfolio, but the portfolio of "stock-picking" theme of the team. Three values seem to me to still have potential. The latter is not only fundamental, it can also be a little speculative. The first value is Danone. This value is performed since the beginning of the year. It has basic solids and a beautiful profile of balance. Danone is positioned on three activities and offers a range of innovative products. Valorization seems not excessive, despite the increase in the course since the beginning of the year. The second value is Fiat, which performed strongly this year with an increase of 90 of its stock market course. It is a very nice value of restructuring. Valorization is certainly more important than that of Renault and Peugeot, but it has a strong potential to improve its fundamental renewal of its range and the appointment of a high quality management. The potential remains strong in the next few months. The third value is Centrica, an English company active in the field of services to communities. The British market is a veritable pool of target values. It is the market on which we have less problems reconciliations and the mergers and acquisitions. Centrica has performed since the beginning of the year. This value is derived by the speculation about the interest that might be Gazprom.

The decline in the price of gas and the delay effect of the increase in the sale price of Centrica individuals should lead to revisions of profits on the rise. This title seems so interesting for the coming months.

LAURENT DOBLER. recently we have strengthened our investment in Novartis, which will pay 18 times profits and who knows at this time a genuine renewal of products. The Galvus will probably break into the market of oral pills for diabetes. In the field of hypertension, the Rasilez, which is very interesting, should gradually replace the Diovan. Novartis also develops new products against osteoporosis. Market has not yet seen how these molecules were important. I have also strengthened our position in H & M, the distributor of cheap clothing. This company is a world success and its value has experienced an average growth of 24 over the last ten years. H & M expands its geographic presence in the world and should be able to become competitive at the top of range. These developments are interesting and augured a strong growth. Finally, the company Numico is interesting, even if it has not done much since the beginning of the year. It is a company specialized in infant and clinical nutrition and which has experienced an unfortunate diversification in functional foods. The company has refocused on its two activities of origin and has made acquisitions in Italy and China. The market is in the expectation from the case of these acquisitions. I believe that Numico will achieve and, when the market will report that these acquisitions will not impede the return on capital invested, we should know a beautiful rising on the title.

GUILLAUME LACONI. for my part, I will introduce you to three foreign average values. The first is Sligro, a Dutch food distributor whose capitalization amounted approximately to EUR 1 billion. Sligro, whose growth was handicapped by the virtual impossibility to open new supermarkets or hypermarkets in the Netherlands, has acquired a part of the chain Edah stores. Its fleet of stores will almost double. Sligro bought interesting locations with a high margin of development: repeated stores generate time that 4,000 euros of turnover per square metre against 7,000 euros per metre square for stores Sligro the best managed. If the improvement is gradual, there is a very significant leverage. In addition, Sligro is less than the average of the market of major distributors, while expected growth of the EPS by approximately 17 over the next two years, with a limited risk profile.

The second interesting opportunity is Guala Closures, an Italian company of about 350 million euros of market capitalization. This company manufactures plugs secure for wines and spirits industry. This last known growth mainly driven by the emerging countries, but the "premium" brands are often victims of counterfeiting. Guala Closures provides plugs that allow to ensure that the bottle has never been opened or that prevent fill a second time with counterfeit alcohol. Guala Closures, world leader with 58 of market share, will be steady organic growth of 6 to 8 per year by 2008 from 2 to 3 for the rest of the industry.

The third value to follow is Quadrant. This Swiss company, which builds about 400 million produces semi-finished plastic parts. It focuses on the 3 of the high-end market. Lighter and more resistant than the metal, pieces of Quadrant are increasingly used in number of sectors: automotive, pharmacy, machine tools, energy, transport, food... Quadrant holds 30 of the global market, in a sector where the barriers to entry are important. Apart from two competitors who each hold 20 of market share, the other players are mainly regional. In addition to its regular organic growth, Quadrant has the possibility to realize acquisitions to strengthen its product portfolio or to gain new customers in countries where the group is today little present. These three values display satisfactory levels of growth, offer good visibility and the prospects of long-term development. In addition, these activities are characterized by significant barriers to entry and have not experienced inflation of the purchase price that has characterized other sectors.

ISABEL LVY. I'll talk about a society that was already in our portfolio, Metropolis border, and that is passed in the metropolis selection portfolio. He is the Hungarian Bank OTP, which has experienced remarkable growth. It is one of the most important Hungarian companies. It pays a little less expensive that other banks European, or less than two times the "book-value", and it achieves both acquisitions in Hungary than in neighbouring countries. This value seems to us very sous-valorisée. Do not forget that the countries of Eastern Europe benefit from European Union funds and the financial contribution creates significant potential for growth. It is important not to underestimate. A value entered into portfolio among average capitalization is the Dutch company Nutreco. This value tended to be cyclic, because society was particularly active in salmon farming. The sale of this activity in 2006 induced a decline of cyclicity and increased the attractiveness of Nutreco. Its current valuation seems appealing to me. Finally, we follow the British company The Game Group, which is a distributor of video games. Significantly, it suffered from the delay by the placing on the market of Sony's Playstation 3. The Game Group is very sous-valorisé.

How do you envisage the end of the year on equity markets

ISABEL LVY. we do not forecast for indices. Sizeable disparities of revaluation of securities can be present, which leaves an important place to "stock-picking". The most interesting values are not necessarily in the traditional indicia. There are more than 7,000 companies listed in Europe and it would be a pity to focus on a given index. There are opportunities to take off the beaten.

GUILLAUME LACONI. the end of the year is generally favourable, we should finish the year on a good note, even if I do not think that markets as fast progress that in recent months. As has been said, is not reason to indices which are not representative of the investment universe. The important thing will be to be selective. The choice of values is paramount, regardless of the sector. It is the "stock-picking" will make the difference.

ESTELLE MNARD. I confirm that "stock-picking" appears strict. I think that the pool is more important at the level of the larger values that display performance still in withdrawal over sized values. We conduct a sectoral allocation in the broad outlines of European portfolios that manages the team, but the choice of values is essential. By the end of the year, we do not decline in European equity markets and this trend should continue.

LAURENT DOBLER. certain excesses in terms of the indebtedness of households and multiplication of risky loans could lead to significant macroeconomic imbalances. Nevertheless, the large amount of liquidity in the world should continue to bear markets. I would be satisfied if the indices maintained at their current level to let performance for next year.