FUNDVIEW-Templeton bets on US consumers, UK builders

Mon Jan 24, 2011 8:07am EST
* Bullish on UK home builders such as Bovis * Sees UK
housing market turning
* Consumer stocks still not fully valued * Among
financials, likes Canaccord and MF Global

By Viraj Nair
BANGALORE, Jan 24 (Reuters) - Franklin Templeton's Global
Smaller Companies Fund is betting on U.S. consumer stocks and
British house builders to pick up this year, but is less keen
on metals and commodities where stocks look over-priced.
The fund looks primarily for bargains with a positive
long-term outlook, said Templeton's Bradley Radin, adding that
some UK builders such as Bovis Homes Group Plc (BVS.L) offer
great value.

"(When) a company has kind of stumbled, missed some
earnings numbers, couple of things have gone wrong ... that's
the golden opportunity to step in and buy good companies at
really cheap prices," Radin told Reuters by phone.

The fund bought most of its stocks in the retail and
consumer space 2-3 years ago, when the recession hammered
consumer confidence and depressed share values.
"Since then (retail stocks) have had a good move up as
conditions improve for consumers in the U.S. Some stocks have
gotten to the point where I've started selling," said Radin,
who has managed Templeton's Global Smaller Companies Fund since

The fund, which had total assets of $1.16 billion at
end-2010, was up about 26 percent last year, while the
benchmark MSCI World index .WORLD gained about 12 percent.
The fund, with more than a third of its portfolio invested
in the Consumer Durables, Apparel and Retailing sectors, last
year sold off its stake in mattress maker Tempur-Pedic
International (TPX.N) and watch maker Fossil Inc (FOSL.O).
As of end-2010, the fund owned 2.7 percent in sporting
goods retailer Hibbett Sports Inc (HIBB.O), and held stakes in
mattress maker Sealy Corp (ZZ.N) and toy-makers Jakks Pacific
(JAKK.O), RC2 Corp (RCRC.O) and LeapFrog Enterprises Inc

"Most of the consumer stocks I own are not fully valued
yet, they're still moving up towards that situation," Radin

As bargains in the typical consumer space dry up, Radin has
switched attention to home builders in UK -- where 10th-ranked
Bovis Homes is his top pick -- as he expects the housing market
there to pick up.

"It's been a bad 4-year stretch because macro conditions
have been terrible.. (But) we're at the tail-end of quite a
nasty bear market in UK housing," said Radin.
A harder process to get a building permit has resulted in
less over-building in the UK than in the United States, making
stocks in Britain much more attractive, Radin said.
Source: Reuters.Com