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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. (NASDAQ: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 (NASDAQ: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. (NASDAQ: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. (NASDAQ: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 (NYSEARCA:ICF) iShares Cohen & Steers Realty Majors
CASH CASH
FIXED INCOME (NYSEARCA:TIP) iShares Barclays TIPS Bond
Emerging Market (NYSEARCA:VWO) Vanguard Emerging Markets Stock ETF
US EQUITY (NYSEARCA:DVY) iShares Dow Jones Select Dividend Index
US EQUITY (NYSEARCA:VIG) Vanguard Dividend Appreciation ETF
INTERNATIONAL EQUITY (NYSEARCA:IDV) iShares Dow Jones Intl Select Div Idx
High Yield Bond (NYSEARCA:HYG) iShares iBoxx $ High Yield Corporate Bd
INTERNATIONAL BONDS (NYSEARCA:EMB) iShares JPMorgan USD Emerg Markets Bond

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.

Source: Analyzing European Stocks That May Buck The Trend

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.