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Andrew T. Gillies is Director of Communications at the Center for Audit Quality, an affiliate of the American Institute of CPAs, in Washington, DC. Based in Washington since 2002, he has also worked in editorial and communications roles at the Investment Company Institute, the World Bank, Forbes, and Vault.com. His policy-themed writing has focused on aerospace and defense, energy and environment, transportation, and financial services.

Monday, December 24, 2001

Arbitrage Across the Seas

Investing in foreign stocks comes with certain hazards, including currency fluctuations and uncertainties about non-U.S. accounting (see previous story). Sometimes those risks are worth taking.

Erik Granade, lead manager of the $102 million (assets) Sentinel World Fund, looks for foreign blue chips trading cheaper than U.S. competitors. He's interested in consistently profitable companies with market capitalizations greater than $1 billion, at least five years of audited financials and lower multiples than their U.S.–based competitors.

Granade cites HSBC Holdings, the $674 billion (assets) financial conglomerate with a base in London and offices all over the globe. Founded in 1865 by an enterprising Scot living in Hong Kong, the former Hongkong & Shanghai Banking Corp. has expanded its footprint with a series of acquisitions, notably Republic New York in 1999 and Crédit Commercial de France in April 2000.

Full story at Forbes.com