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Bloomberg.com : Wealth Manager: Investing
Like the T. Rowe Price team, Steven Chamberlain, manager of Invesco European, takes a bottom-up approach that emphasizes return on equity, but his style is less conservative.Chamberlain is more likely to screen for stocks by looking at high-growth sectors, like telecommunications, technology, and pharmaceuticals.As a result he's more apt to own companies that carry higher-than-average price-to-earnings ratios."Among our competitors, the average P/E is 17 times '99 earnings; in our fund it's 21 times," Chamberlain says.But he's not at all perturbed.
"We drill down, looking for companies that will have an above-average return on capital over at least the next five years-even if the earnings are not great this year," he
explains."And some of these telecommunications stocks are expanding so fast that the P/E is not always the best way to identify value."In November, fully 20 percent of Chamberlain's portfolio was invested in telecommunications stocks.Mannesman and MobilCom in Germany, along with Orange in the U.K. were among his
top 10 holdings, though his
portfolio included less well-known names like Hellsinki Telecom in Finland, ESAT Telecom Group
in Ireland, and STET Hellas in Greece."The market hasn't fully factored in the technological changes that will make wireless such a fast-growing business," he
says.Chamberlain's strategy is bold, but not all of his
favorites are in fast-track sectors.In Sweden, for example, he
owns Assa Abloy
, a lock manufacturer that "sound s pretty unglamorous but is growing at 6 to 8 percent a year."
.While T. Rowe Price
holds positions for an average of two to five years, Chamberlain's average holding period is 12 to 18 months, and the fund's volatility is higher than some.Nevertheless, the fund's long-term record inspires confidence.Chamberlain
, who has been running Invesco European
since 1991, can take credit for five-year average returns of 18.38 percent as of November 20, 1998, and a three-year yield of 23.63 percent, which puts the fund third in Morningstar's ranking of 46 European funds.
Merrill Lynch EuroFund
Steven A. Chamberlain ...
Steven A. Chamberlain Portfolio Manager, INVESCO PLC INVESCO European Fund
Can you give us an overview of the INVESCO European Fund?
...Steven A. Chamberlain Portfolio Manager, INVESCO PLC A vice president of INVESCO PLC headquartered in London, Mr. Chamberlain leads the team that manages INVESCO European Fund.Prior to joining INVESCO PLC in 1987, Mr. Chamberlain served on the equities trading desk as a dealer for Continental European markets.He
also has experience in currency trading.Mr. Chamberlain holds a BSc degree in geology from Kingston University in England.He is the head of the Pan European retail product for INVESCO London.
globefund.com: Search Results
But Stephen Chamberlain, the fund's portfolio manager and a director of Invesco Asset Management Ltd. in London, says the long-term result shows the validity of his style of growth management.
"We aim to invest in the best companies in Europe," he
says."That does not mean the biggest, for we also look for small- to mid-caps.But we do insist on companies that deliver a fast rate of growth over a sustainable period of time."
The stock selection criteria Mr. Chamberlain uses are fairly pure growth standards.He
relies on sustainable rises in earnings per share, subject to a value constraint.But there is a good deal of caution in the style, for Mr. Chamberlain, appointed to head the fund in mid-1996, has been pulling up its relative performance, increasing returns when markets thrived on expected benefits from European monetary integration, and holding on to substantial gains in market downturns.
Currently in the portfolio are:BMTV
, a German firm with rights to 28,000 half-hour shows of children's and family entertainment in Europe."This is a very fast growing company.As channels in Europe proliferate with the introduction of digital television, the value of content will rise," Mr. Chamberlain
says.Earnings of 0.07 euros per share in '98 should rise to 0.48 euros in '99, a 586-per-cent increase.Orange PLC
is rising as the market recognizes its good management and the value of its bandwidth.Within a few years, digital wireless will allow for the creation of numerous new services, all of which will add to cell companies' earnings, he
says.Orange lost money last year and will break even in 1999, Mr. Chamberlain
says.Altran Technologie SA
, Europe's leading engineering consultancy, which Mr. Chamberlain
purchased for 20 euros a share in November, 1998.Recently, Altran
has been trading at 300 euros, providing a gain of 1,500 per cent on a stock whose earnings, 4.5 euros per share for '98, should nearly double to eight euros in 2000.Ericsson AB
, a Swedish cellphone and infrastructure manufacturer that has been operating in the shadow of Finnish competitor Nokia Corp.Mr. Chamberlain
sees a great deal of potential in Ericsson
, however, noting that it has the largest installed base of wireless infrastructure in the world.
For the near term, Mr. Chamberlain
is optimistic that European stock markets will maintain a recovery from a poor start to 1999.He
explains that in the first half of 1999, the European Central Bank
had to maintain tight monetary conditions with attendant high interest rates to show its mettle and to support the euro.High rates hampered business growth, but the euro has begun to recover.Mr. Chamberlain
expects broadly based earnings increases in Europe this year and next year.If the euro continues to strengthen, it will tend to enhance returns expressed in Canadian dollars.
Mutual fund experts are impressed with what they see in Mr. Chamberlain's record of persistent gains.
"But the difference is that Mr. Chamberlain
has avoided mistakes."
© 2001 The Globe and Mail
.All rights reserved.
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...Steven ChamberlainFunds Managed
...Steven ChamberlainSenior Portfolio Manager, INVESCO Asset Management Ltd. Mr. Chamberlain joined INVESCO, the Sub-Advisor for the fund, in 1987.He holds a B.S. in geology from Kingston Polytechnic University.
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32. An Interview With Steven A. Chamberlain , Portfolio_Manager , INVESCO European FundFeature : A bottom-up search for growth stocks in the European marketplace