Magallanes takes advantage of the banking storm of recent weeks and the sector’s stock market falls to fill the bank portfolio. Iván Martín, investment director of the manager, sees “it is difficult for the American and Swiss crises to spread to other European banks” and has bought shares in six banks: Bankinter, CaixaBank, UniCredit, Commerzbank, ING and Eurobank Ergasias.

The value manager is confident of taking advantage of the future recovery of European banks. “In addition, in the current interest rate environment, European banks continue to post good quarterly results, which translates into higher shareholder returns and a strong capital base.”

Magallanes has increased the exposure of the funds to European banks to 14% of the portfolio in the European fund and up to 7% in the fund that invests in the Spanish stock market. In addition, the manager has a 2.5% exposure in its small caps fund.

The manager, who does not rule out the return of uncertainty to the sector despite the fact that in recent days the tension on the stock market has decreased, considers that the current exposure to banks “is sufficient not to compromise the total profitability of the portfolios in case volatility returns.

As Magallanes explains to his investors, the banks that make up his portfolios have liquidity, solvency, deposit-to-loan ratios or percentage of guaranteed deposits, among other metrics, that are much better than their American counterparts.

“Just as it is not the same to invest in the American stock market as in the European one, it is not the same to invest in American banks than in European ones, and, within European banks, it is not the same to invest in Deutsche Bank than in UniCredit”, says the manager in his latest letter to investors. “They are all banks, but none is the same, some fall and others don’t.”

To cite an example, Martín highlights CaixaBank, “its more than 20 million customers and its 25% market share in loans and deposits; its solvency through a first-rate capital ratio of 12.5%, or which is the same, 400 basis points above the minimum required by the regulator, a liquidity ratio close to 200% compared to the minimum 100% required; an approximate percentage of guaranteed deposits of 70% and distribution capacity through dividends and share repurchase of around 9,000 million euros until 2024 (a third of its current stock market value).

Beyond the banking sector, Magallanes has exposure to companies in other sectors such as energy, telecommunications, tourism, food distributors, mining companies, car manufacturers and component suppliers, chemicals and cement companies.

The manager has increased its investment in oil-related companies such as Aker BP and Shelf Drilling; and car companies, such as Renault, Stellantis and Volkswagen.

Regarding the results, the first quarter has been a good quarter for Magallanes. The profitability until March of the star fund of the manager, the Magallanes European Equity has been 12.9%; while the Magallanes Iberian Equity has increased in value by 8.4%, while that for the Magallanes Microcaps Europe has advanced by 6.2%.

Since its launches, the accumulated returns are 102.2%, 55.4% and 35.0% respectively, beating their indices.