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Pankaj Patel, Credit Suisse Global Quantitative Research head, on how investors can apply ‘Buffett criteria’ to European stocks.
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-- European.
Heading into his big annual shareholder weekend for Berkshire Hathaway we started to think about that -- what companies would -- hold and his portfolio from.
Europe our next guest breaking the -- code and bringing it -- Europe joining us now from his company headquarters in a Fox Business exclusive.
Is -- -- Patel he's head of global quantitative research.
At Credit Suisse -- this -- creative idea and we looked at as a recent look let's bring him talk us because we like the thought.
-- applying the -- criteria to the European stocks which may be very cheap right now.
What criteria did you applied the stocks before your -- spit out some names.
Thank -- it is put in -- me -- what are we did was -- Using water and Buffett inspired wanted -- Google is we've got up between I don't put all you have to report you -- stock selection for the you don't.
A simple strategy of using consistent profitability.
And company who -- not using excessive debt.
Hit really hard to find that it lost it -- yes he yes this -- four point are performed by about six point 6% and Iraq.
OK so let's put up some of the guidelines you just said.
Little or no debt I can only imagine it's hard to find European companies right now who haven't taken on some kind of debt but there -- some other things.
A profit always goes for that most of competitiveness.
Also market cap of at least 250 million -- return on equity -- these are yours but return on equity greater than 15%.
And then we've got debt to equity ratio less than 50%.
Improving profit margins ones that always -- flip over -- -- his particular guidelines and you see that he's always looking for those simple.
There -- businesses with no barriers.
To entry you know the ones where they feel that they are just complete and utter winners and then capable management that he -- leave in place.
So she taken a trip to Europe just about two years ago I know you remember that precaution hidden by any thing.
But again I -- not that -- that he's going to buy these companies that idea is to gotten what he's thinking get -- why didn't you rules.
And put that put them but what would Levin let me use Otto the Otto he can't -- them 15%.
Generally good management think of are not only -- manage it at a high level.
Also that's a good leadership you mentioned north of companies have some debt so -- use less than 50% debt equity ratio and also we look at -- -- consistency.
And that's read it in a simple business with a -- won't get around it.
All right so you put all of those things into a computer and here are the names -- that got pushed out and there were about 816 names sixteen at the very top was Burberry group and again when you talk about a motive competitiveness.
This is a company that X acute it's got a look to it that people just absolutely loved.
And it can't sort of be duplicated so that would be in there.
Burberry group as you see it's done not pretty well over the past year well meaning some other ones that you had in here.
That got spit out Nokia on the -- -- tell me about that company.
-- -- I'd -- cannot talk about individual company get thinking of the portfolio off this sixteen company.
And -- -- and he actually looked -- yet event since we launched this portfolio in March this year this won't put up sixteen companies are performing.
MSCI Europe by foreign.
-- -- OK so that EU would have done this sense of course as you said the beginning of the year.
Do you expect that if we start to continue to -- and we'll keep putting some of these other names up there we had energy names.
-- BHP Billiton has a minor.
-- -- you've got a lot of these ones that some people -- unheard of but you believe perfectly fit in swatch group we all know and love but you -- you look at these names and you say.
What happens if there is a leg down we already saw about numbers out of Spain once again.
Wednesday as -- had.
-- this order lost money yes in all of them ideas on anyone getting 2008 it underperformed slightly.
Every year it -- and average and -- are performances six point 6% from and yet the big if you look at it since he started this before very much.
And -- is slightly down.
But this portfolio of these you -- -- that.
You look at the Blue Line everybody the Blue Line is the portfolio of buffet type stocks in Europe that Credit Suisse and -- -- put together.
And you don't we have this hilarious graphic that we've been showing of of mr.
Buffett looking like a French -- and then we had a minute tell got -- there any Greek companies on public instead of any of those.
Make it.
And that let me didn't talk about the country that until you get in Denmark has about 50% of before you know Finland France -- Netherlands had another buck forty.
45%.
And -- comes from say that land and -- it.
Got it -- -- good to see you and we'll continue to watch the portfolio please come back again.
Thank goodness -- 'cause -- is global research at Credit Suisse and don't miss coverage.
Of our weekend with Warren yes kicking in to the Berkshire Hathaway annual shareholder meeting we are live from all my -- starting -- -- night.
Be sure to check out my interview with the Buffett kids that's right.
Susie Howard and Peter it's a Fox Business exclusive the children of the billionaire -- third really down to earth that put a lot of the charity.
Now Buffett always set -- I would only give them enough money to do something vs too much.
