This video was recorded on 4 December 2024. Please note that some references may reflect the context of that time.
Q: What’s your perspective on investing in Europe today?
Krishna Mohanraj, CFA
Europe is struggling for sure. Germany, in particular, we think is really going to struggle. I mean, it's not rocket science. Germany makes cars and Chinese EVs (electronic vehicles) are better than German ones at less than half the price and getting cheaper. It's really hard to be a car maker. We know that because one of our biggest positions is Exor, who owns Stellantis. Incidentally, I think two days ago, Stellantis’ CEO just stepped down — another one of those high-profile CEO exits telling you how difficult that industry is. So, it's hard to see how Germany replaces that vast ecosystem that's built around their auto industry.
And these problems also play out on the political front. You're seeing that in Germany, you're seeing that in France this week — a good chance that the French government won't survive the no-confidence war. But this is all consensus. Everybody knows this. Our job is not to figure out how these things play out politically and economically. Our job is to find ideas that do well, irrespective of how all this plays out.
So, if you think about the positions we own there. In fact, one of the biggest positions, as I mentioned, is Exor. They have a huge stake in Ferrari. I think no matter what happens with the Italian consumer, Ferrari is going to be okay. Another big position for us is Unilever. I think people are going to be buying Dove soap and Ben & Jerry's independent of what happens in the UK or the Dutch politics. So, all we can do is to find wonderful companies that are misunderstood by the market. If you think about some of the positions we own — UCB, Sandoz, Veolia, Allfunds — very different businesses, all European, but we really don't have to take a view or to stand on whether Europe is struggling or not when we buy these businesses.