“Don’t let the forest stop you from seeing the trees.” This is how Beltrán de la Lastra, investment director and president of Panza Capital, defined the current macro environment in which the economy operates. And they hit three trees specific things that move the scene: central bank rate cuts, Chinese stimulus policy and geopolitics. A context described as “very uncomfortable but very profitable” and in which they continue sheltered from the construction sector..
“Every central bank knows that it is time to cut rates and we see it practically everywhere,” de la Lastra explained about this first TREE. A change of scenery which is conditioned, according to him, by a change of protagonist: Inflation is no longer a problem, but growth is starting to be. and this one “cracks”.
Compared to the second TREEfrom Panza Capital come China’s political commitment to reactivate the economy as the most relevant pillar of the entire recovery plan announced, which includes monetary and fiscal policy measures, because “what has a direct impact on China also has an indirect impact on Europe”.
Finally, in the TREE From geopolitics, they distinguish two aspects: on the one hand, the escalation of the conflict in the Middle East, highlighting the important role that Saudi Arabia plays so that oil does not become a problem; and, on the other hand, the escalation of mergers taking place in Europe. In the latter sense, Lastra said that “there will be changes that will be crucial for the future of Europe in the years to come.”
They added a fourth tree that could be another destabilizing element for the markets: the American elections. Beyond the party of the candidates, Panza Capital highlighted the deficit problem of the country that Trump and Harris seem to ignore.
Portfolio changes
The particularity of managers like Panza Capital is to avoid highly indebted companies, needing to refinance in the short or medium term. And, with the macroeconomic scenario that you described, They continue to build their portfolios around two pillars: consumption and industry..
In terms of small consumption, they are disengaging from hotels and spirits and, although they have reduced their exposure there (taking into account the sharp increase in their share price during the year, 40%), Action continues to stand out. its resilience, but also Ryanair, which they bought taking advantage of the decline of the company and because of its well-managed cyclical nature.
A large sum, even if they say that the automotive sector has a “very complex” cycle They bought Forvia, taking advantage of the losses of its title and its strategic position to benefit from the Chinese market share. Although in this part, and thanks to the lower rate environment, they argue that there is a clear winner: the construction sector (although differentiating construction from what is built). Beltrán de la Lastra explained that “the sector has experienced restricted demand due to high tariffs and this has generated pent-up demand which is reflected in high purchase and rental prices.” And, in this sense, they continue to emphasize their preference for brickworks (they already have some in their portfolio like Ibstock or Forterra).
But above all, one of its main changes occurred in banks (a sector in which they hold a small position of 8-9%): They bought Commerzbank. De la Lastra admits that it is a stock that he has been waiting for many years to be able to buy and that the entry of Unicredit into the shareholding was the ideal moment. It defines as favorable one of the two scenarios to which the entry of the Italian bank into the German bank could lead: either the complete acquisition, or the operational improvement of the German entity thanks to the influence of the new shareholder. Although they still don’t like banks, they also enter the Norwegian DNB, highlighting these companies as “outliers” within the sector.
Finally, They return to take position in Vidralataking advantage of the temporary drop in price which allowed them to buy it back cheaper; and at Fuchsfollowing in the footsteps of the company’s CEO who increased his position.
IPOs
After Puig’s IPO and as the next one approaches, Panza Capital’s Europastry continues to hold on: “We do not participate in IPOs“. Despite the praise from the company’s management, Panza Capital believes that the price of Puig (even after the declines it records) remains insufficient and believes that the starting price of Europastry (even in the lower of the range) is not attractive As for Cox, although they will not witness his departure either, they highlight the solidity of the company with its CEO, very solid financially, and the quality of. its engineers.
