For those who are looking for diversity, finding European stocks that you may want to own can be a challenge. Alexander Crawford of Kapitalist.com looks into 4 Eurozone Stocks That May Buck the Trend. While the outlook for Europe as a whole is not rosy, he focused in on four U.S.-traded stocks of European companies with bullish sentiment from short sellers, as measured by significant decreases in shares shorted month-over-month.
His list:
- DryShips, Inc. (DRYS): Engages in the ownership and operation of drybulk carriers and drilling rigs that operate worldwide. Shares shorted have decreased from 11.67M to 8.06M over the last month
- NXP Semiconductors NV (NXPI): Provides mixed signal solutions and semiconductor components. Shares shorted have decreased from 4.81M to 4.08M over the last month
- Tornier N.V. (TRNX): Operates as a medical device company that designs, manufactures, and markets devices for joint replacement and soft tissue repair. Shares shorted have decreased from 853.00K to 678.68K over the last month
- Vistaprint N.V. (VPRT): Operates as an online provider of marketing products and services to micro businesses worldwide. Shares shorted have decreased from 11.08M to 10.30M over the last month
I am curious to see whether this filter delivers results, as I would like access to European stocks. It will be interesting to see how they compare with our benchmark dividend bearing ETF portfolio.
| Asset | Fund in this portfolio |
|---|---|
| REAL ESTATE | (ICF) iShares Cohen & Steers Realty Majors |
| CASH | CASH |
| FIXED INCOME | (TIP) iShares Barclays TIPS Bond |
| Emerging Market | (VWO) Vanguard Emerging Markets Stock ETF |
| US EQUITY | (DVY) iShares Dow Jones Select Dividend Index |
| US EQUITY | (VIG) Vanguard Dividend Appreciation ETF |
| INTERNATIONAL EQUITY | (IDV) iShares Dow Jones Intl Select Div Idx |
| High Yield Bond | (HYG) iShares iBoxx $ High Yield Corporate Bd |
| INTERNATIONAL BONDS | (EMB) iShares JPMorgan USD Emerg Markets Bond |
- European Stocks that May Buck the Trend -- Total of $10K invested equally in each stock
- Retirement Income ETFs Tactical Asset Allocation Moderate -- Above funds using TAA (40% fixed income, 30% for each of the top two asset classes)
- Retirement Income ETFs Strategic Asset Allocation Moderate -- Above funds using SAA (40% fixed income, 12% for each of the five asset classes -- funds selected based on price momentum)
Portfolio Performance Comparison
| Portfolio/Fund Name | YTD Return | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
|---|---|---|---|---|---|---|---|
| Retirement Income ETFs Tactical Asset Allocation Moderate | 2% | 2% | 21% | 10% | 77% | 8% | 54% |
| Retirement Income ETFs Strategic Asset Allocation Moderate | 5% | 3% | 24% | 19% | 118% | 3% | 8% |
| European Stocks that May Buck the Trend | 27% |
Unfortunately this portfolio has a very short life due to the recent IPO of TRNX. I like the idea of having European companies in a portfolio, and I like the idea of a blind filter. I am not sure that I like the idea of short sellers being my filter, as that is a very volatile set of investors and shorting could turn around very quickly.
When we look at the very short term, we can see that the stock selections are doing well, but I would seriously worry about chasing returns rather than a fundamental strategy. I think that this might be interesting to watch and see where it goes, and find out if shorting returned. For now, this is a definite pass.
Three Month Chart One Year Chart
Three Year Chart
Five Year Chart
The five year chart doesn't tell us very much because of the short history. However, it is not a pretty graph and is something I plan to avoid.
MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.
