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Eddie Ramos, portfolio manager of Brown Capital Management’s (BCM) international equities division, believes that investing in overseas markets requires unwavering concentration on company fundamentals. Ramos, who came from the Templeton Investment Counsel in 1998 to start the division, says his administration of the Brown Capital Management International Equity fund (BCIIX) has it ranked among the top 13% of all international funds tracked by Lipper for the fourth quarter of 2001. For the year ending 2000, the fund ranked in the top 5%. As of September 30, the fund was down 25.9%. Since its inception in May 1999, the fund has grown from $1.6 million to $6 million in assets under management.
BCM’s overall investment philosophy mirrors growth at a reasonable price (GARP), which Ramos says is seldom used for global investing. “This approach to investing in today’s global markets takes advantage of the less-efficient information that is available overseas. [It also] identifies stocks that temporarily are mispriced with nonfundamental valuation criteria [such as market momentum].”
Ramos is dedicated to diversification in his portfolio, which includes from 70-85 companies, with no single country representing 25% of the portfolio and no individual security representing more than 5%. “We base our key buy and sell decisions on an analysis of the specific security and company within the context of our overall outlook for the economy and the market,” says Ramos.
For this month’s Private Screening, Ramos has identified the following picks:
America Online Latin America (Nasdaq: AOLA) is one of the leading Internet service providers in Latin America. The company should reach 1.2 million subscribers by year-end, giving it a 20% share of existing Internet subscribers in the region. Ramos says the stock price could move from $3.25 in September to $5 next year.
AsiaInfo Holdings (Nasdaq: ASIA) delivers telecom and Internet software products and infrastructure solutions throughout China. It has key relationships with major telecom providers that give it an edge in the software market for telecom services. In September, the stock traded at $10.85. Ramos sees it moving to $18 in 2002.
Aventis (NYSE: AVE) is the largest life-sciences company in the world, with leading positions in pharmaceuticals and agriculture. Based in France, it is in the process of transforming into a pure pharmaceutical company that will improve earnings by selling a better mix of higher-margin drugs. Ramos expects the stock to soar from $66.75 in September to $85 next year.
Check Point Software Technologies (Nasdaq: CHKP) is an international firm supplying network security infrastructure products. Ramos says even a slight improvement in overall IT spending patterns could lift Check Point’s September price of $25.41 to $48 next year.
Teva Pharmaceuticals (Nasdaq: TEVA) is fast becoming the premier generic pharmaceutical company in the world. It ranks No. 1 in the United States in new and total generic prescriptions, and the Israel-based company’s branded pharmaceutical business is led by Copaxone, which is currently the fastest-growing multiple sclerosis drug on the U.S. market. Ramos says the stock could jump from $56.74 in September to $90 next year.