Rationale
Since late June 2012, for those of more suspicious persuasions, we have been advocating allocating capital to quality restructuring stocks. We have been bullish on high quality growth stocks for over two years and we are still positive on these names. However, we, like many of our clients, risk having a lack of balance should a policy response to a concerted global slowdown result in a reassessment of the growth outlook.
The idea behind this basket was to find palatable cyclical, safer alternatives given they offer some resilience to the cycle if it deteriorates further/leverage to it if it rises. Portfolio balance with minimal risk. The rule being they needed credible and material plans. Some benefitted from exposure to our most bullish structural bet, US Housing (i.e. ELUX, PHIA, AKZO). Others persuaded the market they were serious about change (CA and AV/). All remain buys.
The names
In alphabetical order:
Akzo Nobel, Aviva, BP, Carrefour, Clariant, Danone, Electrolux, Holcim, Lafarge, Lonza Group, Lufthansa, Man Group, Novartis, Philips, PPR, RBS, Sandvik, Sanofi, SCA, Siemens, ThyssenKrupp, UPM, Vivendi, Volvo, and Wood Group.
Please see table below, stocks grouped by sector, with PE and dividend yields priced at 5 June 2013.
