Although the portfolio of stocks Ron Holt recommended to BLACK ENTERPRISE readers a year ago realized a total return of 12.95% from March 26, 2004, to March 24, 2005, he says it wasn’t good enough. Holt, president and director of research at Hansberger Global Investors, says his emphasis on large-cap, high-quality international stocks worked against him. Three of the four stocks he selected from the Harris Insight International fund, which he advises, saw double-digit gains but lagged behind the 20.7% return for the benchmark Morgan Stanley Capital International EAFE Index of European, Australian, Asian, and Far Eastern companies.
While his handpicked portfolio didn’t perform as well as the benchmark index, Holt was competitive in specific sectors where his picks did well. He scored well in the materials sector, which includes coal and steel, and in the commodities sector, which includes iron ore and forest products. One of those high-scoring companies was Cemex S.A. de C.V. (NYSE: CX). Cemex beat the benchmark index with a 28.62% return, as its price rose from $28.37 to $36.49. Holt says the Mexican company found high demand worldwide for its cement.
“That demand led to strong cement prices through the year, keeping revenues and profitability up,” says Holt. With added revenues from British cement company RMC, an acquisition that closed in the first quarter of 2005, Cemex’s growth trend should continue in 2005. His firm is holding on to its position on Cemex, but Holt says the economy is starting to slow again and cautions that the valuation on Cemex stock is high.
Holt’s selection of DBS Group Holdings Ltd. (OTCBB: DBSDY.PK) garnered a double-digit gain, rising from $33.50 to $36.05 per share last year, a 7.61% return. The Singapore-based bank’s strong commercial loan business and its lending to consumers in Asia helped its performance. “The company’s long-term prospects are good, based on increasing consumption in retail markets,” says Holt. “As the economy improves, people will earn more and have more money to spend.” For DBS, that translates into money coming in from automobile financing, home purchasing, credit card underwriting, and other lending.
Holt’s other selection in the financial sector, Kookmin Bank (NYSE: KB), also experienced an increase in stock price. Investors waiting for the Korean economy to be revitalized were rewarded with a 10.16% gain as the bank’s stock price rose from $39.87 to $43.92 per share.
Two to three years ago, Korean consumers racked up large amounts of debt after being introduced to credit cards. Last year, the Korean government began lowering lending rates and cutting personal income taxes to stimulate consumer spending again. The result has been a stronger Korean economy, which should lead to more loans for Kookmin and other Korean banks.
Holt’s final pick, Canon Inc. (NYSE: CAJ), continues to be a world leader in the imaging market. The stock’s price rose 5.42%, from $49.67 to $52.36 per share, mainly because Canon went after the market for larger printer and copier machines for corporate clients that Xerox Corp. now dominates. “There are opportunities for Canon