Monday, March 01, 2004

Europe: the Fast Track

If there's money to be made off the powerful force of globalization, somebody like Ivo St. Kovachev ought to be able to make it. The 45-year-old Bulgarian has degrees in technology and business from schools in the Czech Republic and England. He was a Fulbright Scholar in the U.S., speaks five languages and once headed up the foreign investment division of Bulgaria's state privatization agency. He even fitted in a year in Japan, working for the United Nations. Today he's based in the Czech capital, Prague, where he picks stocks for Chicago's Driehaus Capital Management, which he joined in 1996.

Kovachev is one of the three managers of Driehaus International Discovery, a $258 million growth fund that goes after small and medium-size stocks abroad. The other two managers do Asia and emerging markets; Kovachev handles the half of the portfolio invested in Europe.

Among Kovachev's current favorites is Tele2, a fixed-line, Internet and mobile communications outfit based in Stockholm that operates in 22 countries,including Portugal and Russia. Its revenues, $4.8 billion for its latest 12 months, have grown at a 49% annualized clip for the past five years.

The company--not so medium-size anymore--and its shares, listed in the U.S. as American Depositary Receipts, have more than doubled in the past 12 months. They sell for 1.7 times sales and 50 times trailing earnings, versus equivalent multiples of 0.4 and 8.2 for AT&T. Kovachev isn't deterred. "Internet penetration in Europe is on average lower than the U.S.," he says, "so this is a secular growth story, and it should continue to do well."

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