International Equity Expert Sees Renewable Energy Power Generation And Management Utilities Producing Outsized Investment Returns
December 7, 2009 - The Wall Street Transcript has just published China & Japan Report offering a timely review of the Diversified Investments sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
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Paul Sutherland, President of Financial & Investment Management Group, Ltd. (FIM Group), has worked in the investment and financial advisory business since 1975. As a Senior Portfolio Manager, he has been managing global total return investment portfolios under the "investing without borders" style for more than 23 years.
TWST: Would you tell us about some of the companies you find attractive, exploiting the themes you mentioned and the reasons they were attractive to you?
Mr. Sutherland: Our largest holding is a company called Pargesa Holdings (PARG.SWF). Pargesa basically is a holding company with significant insider ownership, and it is involved in energy, water and waste services, specialty materials and building materials. It owns very large chunks of Total (TOT), the large French energy company, as well as Suez energy utility. When you take the value of all of its holdings, you're basically ending up with some very great companies. Because of the holding company structure, Pargesa probably sells for around 20% to 30% less than its breakup value. Since Pargesa is a Swiss-based company, there are a lot of other things that have been helpful, like its currency being in Swiss francs, which has been helpful in providing us with some currency returns.
Another company that we like is Chunghwa Telecom (CHT), Taiwan's main telephone company. This actually does have an ADR in the United States and pays a nice dividend yield. We think that Taiwan is going to have stronger and stronger ties with Mainland China, and that it's a good way to leverage the growth of that area with less risk than you might have investing directly in China. We own this company even in our more conservative income-oriented portfolios.
We also own some utility companies in Europe and United States. We own Terna (TRN.BIT), which is an Italian energy company that basically owns the extra-high-voltage grid in Italy and pays out a very nice dividend, which has grown over time. They've got very savvy management and good cost controls, and realize that the energy area is going to be moving more and more toward renewables like solar, wind or hydro.
We own EDP, which is the largest seller of electricity in Portugal, and they've got 10 million customers. They are basically the fourth largest wind energy operator in the world, pay a nice dividend and also own some assets in Brazil, which is another emerging country we like. We like the energy utility area a lot, especially ones that are forward-looking and realize that the world is moving away from coal, and toward wind, solar and hydro.
In the United States, we like Xcel Energy (XEL), which has a nice dividend. They are in the Midwest and are really committed to being a wind and energy producer. They also have good management that I think is very forward-looking. We think that they will grow well in their markets. It's more of a conservative name that we don't own in our growth portfolios, but we own them in most of our income-oriented portfolios.
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