Amid 'Brexit' selloff, some fund managers are bargain shopping

Fri Jun 24, 2016 2:54pm EDT
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By David Randall

NEW YORK (Reuters) - Britain's unexpected decision to leave the European Union spurred a global stock market selloff that has inspired some opportunistic U.S. investors to move in the opposite direction.

Operating on the belief that the initial rout might be an overreaction, even in some European stocks, several fund managers said on Friday they were buying up shares of big blue chips, domestic companies that are insulated from a lot of European activity and even European companies that might have been oversold.

"We are looking to put cash to work in some of our favorite companies which are cheaper today," said Kevin Dreyer, the co-chief investment officer at Gamco Investors Inc, noting holdings such as razor blade and sunscreen-maker Edgewell Personal Care Co that were down more than 3 percent in morning trading.

The benchmark S&P 500 was also down about 3 percent in midday trading.

Still, some investors gravitated toward U.S. companies that are relatively insulated from Europe and can withstand what many expect are coming referendums in France and Scotland over their EU membership, as well as a summer that is expected to remain volatile at least until the U.S. presidential election in November.

U.S. stocks and bonds are a "great" buying opportunity on Brexit, said Gregory Peters, a senior investment officer at Prudential Fixed Income with more than $621 billion of assets.

"Uncertainty will be a multi-year event, which will clearly benefit the U.S. from rates to risk assets (except for financials), as the U.S. will benefit from capital flows," he said.

Several fund managers said they were drawn to U.S. companies that had little exposure to Europe.   Continued...

A trader works on the floor of the New York Stock Exchange (NYSE) after the opening bell in New York, U.S., June 24, 2016.  REUTERS/Lucas Jackson