There are also great opportunities driven by the fact that Europe is not all about Europe. There are companies headquartered in Europe that can allow you to sneak into emerging markets. But you have to do your homework to find them.
Lonrho PLC is a superior example. This U.K. headquartered (and traded) holding company operates 100% of its businesses on the African continent. An investment here gives you exposure to high-growth Africa at a developed European distressed valuation.
Also in this category is Bollore Group, a 190-year-old French-based (and traded) conglomerate that has yet to be discovered by the market. It generates more revenue and earnings from Africa and Asia than from Europe and is one of the best examples of a company that has been thriving and prospering in spite of the crisis.
Another arena that is ripe for targeting in the search for opportunity is tightly-held, family-controlled businesses that have recently undergone strategic or substantial management changes. Many family controlled businesses have been notoriously poorly managed, but survived despite themselves and were even able to expand in the very favorable markets of the late 20th century. Buoyant markets allowed these companies to mask their flaws and inefficiencies; as Warren Buffett noted, “You only find out who is swimming naked when the tide goes out.”
Exor S.p.A. is an excellent example. Exor is the main holding company for the Agnelli family in Italy. The family’s head, 36-year-old John Elkann, has initiated a complete transformation of the holding company, because a shift to the next generation of family control has sparked a fresh focus on creating value. Elkann’s goal has been to simplify the company into a holder of fewer, larger investments rather than a control vehicle for a vast array of assets. He has rejected the “iron fist” management approach favored by many family business heads and instead has hired professional managers like Sergio Marchionne, who has been empowered to create value by transforming Exor’s Fiat and Fiat Industrial operating units into world class organizations.
Its challenges notwithstanding, Europe is firmly in business today, and its outstanding companies should endure, presenting investors with an exceptional generational opportunity. We believe the only real question is to what extent investors will recognize that Europe’s future promise represents an outstanding investment prospect today. The full scope of this opportunity – like so many similar situations before it – will likely only be fully revealed in retrospect. Yet if one is attuned to history – in particular, the history of the investment markets and of Europe as a pre-eminent arena for business – one can draw confidence that the chance for wealth is real and there for the taking.
David Marcus is Co-founder, Chief Executive Officer and Chief Investment Officer Evermore Global Advisors, LLC. Evermore Global Advisors is an investment manager that employing an active value investment discipline to find undervalued companies anywhere in the world with the potential to
yield long-term value for investors.