I'm not familiar with Thomas Neuhold, but this Q&A with him in BusinessWeek makes for an interesting read:
When stocks roar ahead, as they have been in Eastern Europe lately, having a strict buy and sell discipline and holding cash can help ease the whiplash when they turn south. Thomas Neuhold navigates The World Funds—Eastern European Equity Fund in Vienna as a bottom-up value investor who examines the profitability and valuation levels of companies before he dips in. He has loaded up on stocks in banking, real estate, and telecom that will benefit from consumers' rising incomes in Eastern Europe. And he's avoiding the "overheated" commodities and energy stocks in Russia.
Neuhold currently keeps the fund 40% in cash. When asked what trends he's seeing in Eastern Europe, he replies:
We like the convergence story very much. In sectors like banking, insurance, and real estate, the countries in Eastern Europe will reach similar penetration levels of Western Europe and the U.S. In the banking sector, if you look at the ratios—loans to GDP, mortgages to GDP, credit cards per capita—a lot of countries in Eastern Europe are still very below the penetration levels that we see in Western Europe and the U.S.
We think with rising income levels—we see real income levels increasing between 2% and 4% in the more developed markets like Poland and the Czech Republic and up to 10% to 12% in the less-developed markets like Romania, Ukraine, and Russia—there's a good chance that these countries will show very attractive growth in products including loans, mortgages, insurance, and credit cards. This is an excellent long-term growth opportunity for banks and insurance companies.
Interesting stuff. Like I said, I'm not familiar with Neuhold.
But I find you can get better glimpses into how things really are in other parts of the world by reading the thoughts of investors putting money to work on the ground -- rather than listening to politicians, government bureaucrats, NGOs and UN types.
Just my opinion.
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