The resignation of Banco Santander to the signing of Andrea Orcel as CEO, announced last September, has caused a huge impact on the market. The president and director of investments of Bestinver, Beltrán de la Lastra, appreciates this surprising reversal, due to the refusal to assume the more than 50 million euros that UBS had to pay to Orcel, in a positive way. "We like Santander more without Orcel than with him". The person in charge of the manager of the Entrecanales family considers that the most attractive part of the Spanish entity is its retail banking business where it has a great experience. "Santander is not an investment bank," he explained.
Precisely, Santander is one of the main novelties of the Iberian portfolio of Bestinver with a weight greater than 2% of total assets. It is the "first time" that the entity chaired by Ana Botín enters the management's radar due to the fall in the price. "Before we had never had a sufficient safety margin to incorporate it." De la Lastra values Santander as "a very diversified bank with exposure to both developed and emerging countries".
Bestinver could not avoid the widespread losses suffered by the Spanish industry of collective investment in 2018. Its national fund fell by 8.7% and Bestinfond by 13.4%. "We are long-term investors and we know that precisely going through these moments is the price we must pay for the good long-term returns we enjoy and which we hope to continue enjoying in the future", according to De la Lastra.
Bestinver divides investment options into three categories. On the one hand you would be the "good" companies, of great quality and with high predictability in your income, but which now tend to have very expensive prices. In the second place, the firm talks about "ugly" companies, also big generators of cash flows but that are penalized because their business is exposed to the economic cycle. In this group you can mainly find industrial cutting companies. Finally, it talks about the "bad" companies, whose contributions have been penalized, but that does not make them good investment options given their very poor quality. "We believe that in the market environment in which we find ourselves it is propitious to give an opportunity to the ugly companies", reme De la Lastra.
From Bestinver believe that volatility will continue to be the general tone of the market in 2019 because it begins to dismantle "the largest experiment in monetary policy in history." Of course, De la Lastra recalls that volatility does not necessarily imply falls in prices, "but sudden movements in the prices". The manager has taken advantage of the recent market downturns to enter values that have been around for a long time but that until now did not have the price that they considered appropriate. "Our liquidity has fallen from the 19% we had at the beginning of the second half of 2018 to less than the current 8%."