Investing Abroad: Dutch Stocks
Matthew is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Diversification is the best defense against global uncertainty. Living abroad, that is one truth that I have come to appreciate more and more. With so much uncertainty in Europe and the rest of the world, we sometimes forget that truth. In these times of uncertainty, many investors seek the safety of good US companies, avoiding the rest of the world completely. Diversification means more than just different sectors of the US economy. Diversification also means foreign companies that will protect your portfolio from domestic risk.
The simplest way for individual investors to achieve adequate international diversification is through an ETF. The iShares MSCI World Index Fund will give investors sufficient global diversification, with a decent dividend to boot. For investors looking for a more hands-on approach, below are five Dutch companies that might be suitable for a more globally diversified portfolio.
1. Unilever N.V. (NYSE: UN) is a multinational Dutch-British consumer goods company. Unilever is a bit unusual in the manner in which it operates, as it is technically and legally two separate companies. These two separate companies are the British Unilever PLC headquartered in London and the Dutch Unilever N.V. headquartered in Rotterdam. Although these two legal entities have different headquarters, stock listings and shareholders, they have the exact same CEO, Board of Directors and management. For all intents and purposes, these two companies operate as the exact same company.
Unilever sells numerous different product types; food, beverages, personal care and household products. For food these include Ben & Jerry’s ice cream, Skippy peanut butter and Hellmann's mayonnaise. On the beverage side they have Lipton tea and Slim Fast weight loss shakes. Personal care brands include Dove, Vaseline, Axe and Q-Tips. Household products include various brands of laundry and dish washing detergent found primarily outside of North America. And these are just a few of the hundreds of brands under the Unilever corporate umbrella.
2. Royal Dutch Shell (NYSE: RDS-B) is one of the five ‘Super Major’ oil and gas companies (number two based on market capitalization). The company has operations in more than 90 countries. Over the years, Shell has been transitioning itself into more of a natural gas company, which currently makes up about 48% of total production. While natural gas prices have been hovering around all-time historic lows, natural gas prices in Europe and elsewhere in the world are much higher. Despite this, there is no good way to export US natural gas to take advantage of that difference in price. That will begin to change in 2015 when Cheniere Energy completes its liquefied natural gas (LNG) export facility. Once this facility is complete, companies like Shell with lots of natural gas production can ship their gas out of the United States.
3. ING Group (NYSE: ING) is a global financial institution involved in banking (retail, direct, commercial), investment banking, asset management and insurance. Like many European financial institutions, Europe’s seemingly endless dysfunction has not been a friend to ING Group. Though ING is a global company, it has become less global over the years as a way to support its European operations. Formally best known in the US for its subsidiary ING Direct USA (the online bank ING Direct and the online broker ShareBuilder), ING Group sold this in June 2011 to Capital One Financial for $9 billion. Likewise in July 2011, ING sold nearly all of its Latin American insurance business for $3.85 billion. And in 2009, it spun-off its stake in its Canadian insurance business for $2.4 billion. These sales have given ING a little more stability and certainty in the very unstable and uncertain mess that is Europe.
4. Chicago Bridge & Iron Company (NYSE: CBI) is a Dutch company headquartered in Texas, operating in more than 80 countries. It is a multinational company involved in engineering and construction, providing services and technology in the energy industry. This involved upstream and downstream facilities for oil and gas, elevates water storage tanks (those huge water towers), nuclear containment vessels, LNG export facilities and LNG re-gasification facilities (to name a few). About two weeks ago, Chicago Bridge & Iron reached an agreement to purchase one of its smaller peers, The Shaw Group, for about $3 billion. The combination of the two companies will create one of the largest engineering and construction companies in the world. The deal is expected to close in the first quarter of 2013.
5. Yandex (NASDAQ: YNDX) is an internet company, generally considered to be the Google of Russia. Yandex is a Russian search engine, but is based in the Netherlands. Yandex has captured about 60% of all the search traffic in Russia (compared to about 20% for Google). Google’s Russian language searches are generally considered to be inferior to Yandex’s search results. This is primarily due to Yandex being built from the ground-up with the Russian language in mind, while Google’s programming is unable to replicate the same result quality. Yandex is like a native speaker of Russian, while Google has learned it as a second-language much later in life. The native speaker has a built-in advantage over the second-language speaker. This has allowed, in part, Yandex to have three times the market share that Google has.
Are these five Dutch companies suitable for your own diversified portfolio? That I cannot say. Use this list a good stepping-off point for your own research into good companies in the Netherlands and elsewhere in the world. Please contact a tax professional about the suitability of international companies in your portfolio.
WhichStocksWork has no positions in the stocks mentioned above. The Motley Fool owns shares of Google. Motley Fool newsletter services recommend Google and Unilever. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.