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.

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