Published on Sep 15, 2016
Softback
surprised the market when it announced the purchase of chip design
specialist ARM Holdings for $32 billion this summer. That's just the
opening gambit in a long game for the Japanese telecom investor, said
Benjamin Beneche, portfolio manager for the ASTON/Pictet International
Fund. "It's a really meaningful long-term acquisition because it opens
Softbank up to the 'internet of things'," said Beneche. "It's a
brilliant business." The takeover of ARM gives Softbank a company whose
semiconductor know-how is used in 95% of feature and smartphones
globally and increased clout to compete in the growing market for
connected devices. The purchase marked a dramatic departure from
SoftBank's recent asset-sale drive, which has included a June deal worth
$7.3 billion to sell its majority stake in Finnish games maker
Supercell to Tencent and co-investors and the sale of $8.9 billion worth
of Alibaba BABA securities, bringing down its holding to about 28%. The
ASTON/Pictet International Fund is up 4.6% thus far in 2016, according
to Morningstar. The $1 billion fund has returned 5.2% in the past 12
months, outpacing 88% of its rivals in Morningstar's foreign large blend
category. Royal Dutch Shell is another one of Beneche's best bets.
Shares of the energy giant are up 10% thus far in 2016, helped along by
the rise in natural gas prices. Royal Dutch Shell became the leading
natural gas producer when it completed its $53 billion acquisition of BG
Group earlier this year. "This BG deal was entirely transformational
for their business," said Beneche. "It made their business more stable
with growth in the future and we feel it helps sustain their dividend."
Beneche is also bullish on GlaxoSmithKline , which has seen its shares
rise 7% year-to-date. Beneche said the drug giant's shift to
consumer-based products and vaccines helps insulate it from the drug
pricing debate hurting pharmaceutical stocks in the U.S. Finally,
Beneche is positive on ASML , up 15% year-to-date, saying the
semiconductor equipment-maker will not be hurt by the Samsung phone fire
fiasco. Last week Samsung announced it is selling about 6.3 million
shares in ASML for about $681 million. Samsung said in an August
regulatory filing it owned a 2.9% stake, or 12.6 million shares, in
ASML. "Samsung is an important client but ASML has exposure to the whole
value chain," said Beneche.
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