Top fund managers are buying into Italian stocks as the country’s stock market outpaces all major European rivals this year.
Italy’s leading FTSE MIB index has returned 13.5% in 2023, the best performance of Europe’s five biggest markets, also beating the US S&P 500’s 9.7% return.
Top-performing portfolio managers have pounced on the rally, snapping up Italian companies and driving their shares higher up the Citywire Elite Companies Ratings.
Twenty-seven Italian companies have climbed the ratings this month, the most of any European country barring the UK, whose 32 risers were significantly outweighed by the number of fallers.
How Citywire Elite Companies Ratings work
They include five companies which have ascended to Citywire’s top AAA rating:
- Amplifon (IT:AMP), the world’s largest hearing aid retailer.
- Piaggio (IT:PIA), manufacturer of motorbikes and scooters.
- Telecom Italia (IT:TIT), Italy’s largest telecommunications provider.
- Banca Mediolanum (IT:BMED), among the country’s 10 largest banks.
- Mediobanca (IT:MB), Italy’s leading investment bank.
Each had previously been rated AA and their rise takes the total number of Italian companies boasting Citywire’s top AAA rating to 16.
Seven top-performing portfolio managers have been buying into Amplifon’s shares over recent months. Harry Wolhandler and Nicolas Lasry, managers of the MAM Premium Europe fund, and Ryan Carpenter, who runs the Driehaus International Small Cap Growth fund, bought into the shares in March before adding to their positions.
Longstanding investors Alistair Wittet, Arnaud Cosserat and Franz Weis, managers of the Comgest Growth Europe ex-UK fund, and Carl Auffret, who runs the DNCA Invest SRI Europe Growth fund, have been buying more shares this year.
Amplifon has delivered consistent growth of sales and operating profits over the past decade, during which time its shares have returned 813%. The shares are priced at 30 times forecast earnings over the next 12 months.
Having steadily marked down earnings forecasts over the past year, brokers have begun to upgrade their estimates after the hearing aid maker last month said 2023 sales and Ebitda were likely to surpass previous expectations.
Join the elite! Get the weekly Citywire Elite Companies newsletter
Auffret said in his latest update to investors that Amplifon’s organic growth of 7.4% in the first three months of the year was ‘very reassuring’. The manager is overweight Italian companies, holding 6.2% of his fund in the country, versus 3.5% for his Stoxx Europe 600 benchmark, and holds more than a third of his portfolio in healthcare stocks, twice the benchmark weighting.
Like Auffret, healthcare is a major theme for Wittet, Cosserat and Weis, who also devote a third of their portfolio to the sector, which they see as ‘well positioned to capture the long-term growth opportunities of the coming year’.
‘The next decade will see the remainder of the baby boomer population retire, resulting in greater demand for healthcare products,’ they said in their latest quarterly update to investors. ‘The portfolio’s holdings in the healthcare space, through pharmaceutical companies, their suppliers, or medical device companies, should see it well positioned.’
Luxury goods help Europe beat US
European markets are outperforming the US this year, having lagged stockmarket returns from the world’s largest economy for more than a decade.
Europe’s large luxury goods sector has played a key role, benefiting from both China’s reopening and wealthy customer spending that has proved resilient amid inflationary pressures.
France’s Citywire Elite Companies AAA-rated LVMH (FR:MC), owner of the Louis Vuitton and Moët Hennessy brands, last month became the first European company to hit a $500bn valuation, and while its market cap has since dipped below that milestone, the shares remain 18% higher this year.
Italy’s market has meanwhile been driven higher by luxury goods companies such as AA-rated Ferrari (IT:RACE), which accounts for an 8% weighting in the FTSE MIB index and is up 34% this year. Shares in AAA-rated luxury fashion house Moncler (IT:MONC) have risen 26% in 2023 while AA-rated Davide Campari-Milano (IT:CPR), the drinks maker behind the Campari, Aperol and Wray and Nephew brands, is up 31%.
Wolhandler and Lasry, who hold nearly a quarter of their fund in Italian companies, well above their 14.6% weighting in their Euro Stoxx Small benchmark, have also been enthusiastically adding to their position in Piaggio shares this year.
The company, which the pair first bought in November last year, is now the second largest position in MAM Premium Europe alongside Amplifon, with both companies representing 2.7% of the portfolio.
Shares in Piaggio have returned 52% over the past year, as the company, maker of iconic Vespa scooters, delivered record results in 2022. The stock is meanwhile a 3.4% position for Aymar de Léotoing and Julien Bernier, who first bought the shares for their Digital Stars Continental Europe fund in February and have since ramped up their holding.
Bernier and de Léotoing also bought into Mediobanca in April, while seven other top-performing portfolio managers have been adding to their positions in the shares. The pair hold 14.8% of their fund in Italian companies, three times the weighting in its MSCI Europe ex-UK benchmark.
Hugh Cuthbert, another top fund manager tracked by Citywire Elite Companies, is also overweight Italian companies, with 11.7% of his Noramco Quality Funds Europe held in the country’s shares. Cuthbert was among those buying into Mediobanca and has also been snapping up more shares in Banca Mediolanum.
Despite 2023’s banking selloff, shares in both are in positive territory this year, with Mediobanca having returned 15% and Banca Mediolanum 1%.
Italy’s ratings risers
Source: FactSet
