< The 2016 All-Europe Research Team
Barry Dixon
& team
Davy
First-Place Appearances: 16
Total Appearances: 17
Team Debut: 1998
Barry Dixon guides his Irish equities platoon to first place for an eighth year in a row — raising Davy’s tally of top finishes on this roster to 16 — and earns his first appearance on the Paper & Packaging lineup, as a runner-up. His group of 20 analysts and two economists monitors 58 companies in this space, winning plaudits from one fund manager in Milan for generating “great investment ideas,” especially on Smurfit Kappa Group, a Dublin-headquartered corrugated packaging giant. “They were quite good at clarifying things about the company,” this client attests. “They explained the whole story — everything from the management, to the production process, to Smurfit’s place in the industry and markets — and how they developed their investment case and final recommendation. It really put the company on our radar screen.” Another name that Dixon and his Dublin-based colleagues have been strongly advocating is CRH, a multinational building materials concern that has been undergoing a major transformation over the past two years. Management has shed noncore, lower-profit holdings, such as its clay businesses in the U.K. and the U.S., and recycling subsequent gains to fund a series of bolt-on acquisitions that included a pair of important and sizable deals last summer. They laud the corporate strategy under an aggressive chief executive, Albert Manifold, who took the reins in January 2014 and negotiated both the €6.5 billion ($7.3 billion) purchase of European and North American assets offloaded in the merger between cement giants Holcim of Switzerland and Lafarge of France, and the $1.3 billion takeover of U.S. glazing products company C.R. Laurence Co. “Both acquisitions enhance CRH’s vertical integration strategy and will protect the profitability of the downstream operations,” explains Dixon, 48. The Dublin-based company, he notes, was already benefiting from rising infrastructure-related spending in Eastern Europe, the Philippines and the U.S. Now, with free cash flow from the combined businesses approaching €2 billion, Davy’s researchers expect management to pay down debt while enhancing shareholder value by increasing dividends, pursuing additional M&A activity and undertaking accretive spending on capital improvements. They believe that fundamentals justify a share price of €32; it was €23.21 in mid-January. The team is similarly bullish on Dublin-based bookmaker Paddy Power, which agreed in September to buy rival Betfair Group of London. The £6 billion ($9.2 billion) tie-up is expected to be completed this quarter, creating the largest online gaming company in Europe. Paddy Power Betfair is projected to produce some €100 million in synergy benefits, says Dixon, and aided by 10 percent growth in the underlying market, can expand earnings by 27 percent annually over the next three years. At €129, his crew’s price target for the betting exchange represents a premium of 9.3 percent to the stock’s value in mid-January.