The fund turned bullish on Europe at the beginning of 2012, buying Ludwigshafen, Germany-based BASF SE, the world’s biggest chemical maker, and Buzzi Unicem SpA, an Italian cement maker.
While billionaire investor John Paulson told clients last year that the euro would fall apart, and Citigroup Inc. economist Willem Buiter said that there was a 90 percent chance that Greece would exit the single currency, Marketfield’s bets paid off. BASF climbed 32 percent in 2012. The fund gained 13.5 percent that year and beat 99 percent of its peers.
German, Italian and Irish stocks are attractive now that banks are healing and funding costs remain about zero, said Aronstein, whose reading takes him from Shakespeare’s plays to the treatises of free-market economist Ludwig von Mises.
European stocks accounted for more than 25 percent of the holdings, according to the fund’s monthly commentary dated May 21. Bets on declines in emerging-market shares, metals and dollar bonds of 10-year maturities or longer made up 34 percent of the portfolio.
Largest Holdings
Marketfield’s largest holdings as of April 30 included ETFs for Mexican, Japanese and Italian stocks, U.S. homebuilders and regional banks, according to the company’s Website. American stocks are in a multiyear bull market as manufacturing grows after losing jobs to China for the last decade, said Aronstein, who also makes knives and tools as a hobby.
So far this year, Marketfield has gained 7.6 percent. While it outperforms 92 percent of competitors that follow similar disciplines, it lags behind the 16 percent total return in the S&P index, data compiled by Bloomberg show.
Shaoul and Aronstein study economic data, money flows and corporate earnings, and compare their views against market consensus to formulate their investment strategy.
Once they decide on the themes, be it a housing recovery or emerging-market slowdown, David Johnson, director of research, screens for companies that are most exposed to the trend. They typically recommend four to eight investment ideas that will play out over the next one to five years.
‘One-Two’ Punch