(Bloomberg) — Europe’s biggest value-oriented fund recently bought its first technology stock.
During a brutal equity selloff in the first half, and with technology stocks particularly hard hit amid rate hikes, semiconductor maker Infineon Technologies AG presented a rare opportunity for Andreas Wosol, head of Amundi SA’s equity value fund.
“The margin-of-safety opportunity in this part of the IT segment became so attractive that all of a sudden, a growth stock becomes value,” Wosol said in an interview. The 3.6 billion-euro ($3.6 billion) fund bought shares of Infineon — which is a major supplier of chips for automakers — in April.
This is only the second time in the past two decades that a traditional growth stock has behaved like a value one, Wosol said. The last time was during the 2008 global financial crisis, while valuations came close in the 2020 pandemic-driven rout, he said.
After a 45% slump this year, Infineon is trading at a forward price-to-earnings ratio of 12.4 — near its biggest discount to the Stoxx 600 Technology Index on record. Still, it’s “structurally attractive” due to its focus on energy transition at a time when Europe is seeking to reduce reliance on Russia, Wosol said. Infineon raised its outlook in May, citing strong demand for car chips.
Wosol says his approach to identifying value stocks is different to peers. Where traditional fund managers use relative price multiples to assess the value of a business, Wosol applies an “intrinsic value-driven approach,” in which he calculates a margin of safety — a level below what he sees the business as intrinsically worth — that acts as an entry point for investments.
“It’s completely irrelevant if the stock is a tech stock, a bank, a cyclical, a consumer and automotive or a pharmaceutical name,” Wosol said. “The question is only how much margin of safety to the intrinsic value of a business I see that makes it attractive to invest.”
Wosol’s fund, which launched in 2008, has lost 13% this year for institutional investors, and 16% for retail investors, while the benchmark Stoxx Europe 600 Index is down 15%, according to data compiled by Bloomberg. Top holdings include HSBC Holdings Plc, Novartis AG, TotalEnergies SE and Shell Plc, according to data from Amundi.
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