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MARK HOLOWESKO: COOL SAILORMark Holowesko, the athletic-looking investor who watches over $80 billion for Templeton Worldwide's global-equity group, is having a hard time finding bargains these days in many of the world's hot markets. As chief of Templeton's Foreign and Growth Funds, among others, the Bahamian-born Holowesko thinks France and Italy are getting too pricey--and the U.S. is off the charts. American investors, he says, ''are driven by liquidity and momentum, not by valuations.'' In fact, 20% of Holowesko's assets are in cash. So where is he shopping now? He still likes Britain and Scandinavia despite their recent gains. And he finds value in Asia's dirt-cheap markets. Holowesko could use some hits to spice up his performance (table). Over the past year, Growth and Foreign have lagged behind the Standard & Poor's 500-stock index and Morgan Stanley Capital International World and Europe, Asia, & Far East indexes. As a result, they have fallen to the bottom half of their peer groups. ''His value orientation leads to short-term underperformance,'' says Morningstar analyst Bill Rocco. Holowesko, who skippered a two-man boat for the Bahamas in the 1996 Olympics, accepts the criticism with equanimity. ''We tend to buy too early and sell too late on a third of our stocks,'' he says. One he failed to exit early enough was Peregrine, which crashed in December, costing him $80 million. But he takes solace in knowing that only 11% of his group's assets were in Asia when the crisis hit. So why is he going back now? Distressed companies' prices are so far below Templeton's estimates of their true book value that their long-term potential far outweighs the risk of further declines, he says. That's why Holowesko is buying Hong Kong stocks. He's adding more South China Morning Post, publisher of Hong Kong's largest English-language daily newspaper. A classic asset play is Cheung Kong, a Hong Kong real estate conglomerate that owns half of Hutchison Whampoa, another conglomerate that runs ports, among other things. Holowesko argues that Cheung Kong's market cap almost equals the value of its Hutchison Whampoa holdings, giving him the former's assets for free. Indonesia's crony capitalism doesn't faze Holowesko. He likes Asia Pulp & Paper, a Singapore-based exporter with huge Indonesian operations that sold $500 million in convertible debt recently. He's also sticking by South Korea, which has agreed to a $57 billion International Monetary Fund rescue. He likes SK Telecom, a cellular-phone provider that uses advanced technology and has seen its American depositary receipts drop to a mere 5.5 times operating earnings. Europe used to offer similar values five years ago, when Holowesko began buying there. Since then, Europe has been restructuring. But there are still some plays left. ''Economic conditions there today are similar to what was happening in the U.S. 10 years ago,'' he says. Lately, Holowesko bought Hillsdown Holding, a British foodmaker, and added to his stake in Norwegian oil independent Saga Petroleum. Even in the U.S., which he says would have to fall 40% to return to its average valuation of the past 20 years, he has found value. He recently bought Titanium Metals, a big supplier to Boeing. It sells for nine times earnings, vs. the average market valuation of 26. That Holowesko has ferreted out cheap stocks in the midst of Wall Street's boom is no surprise. He remains a devoted acolyte of Sir John Templeton, who rejected and then hired the Holy Cross and Babson College grad in 1985 only after he proved his worth by excelling on the Certified Financial Analyst exam. He keeps Templeton's rejection letter on his desk, along with one announcing his first raise of $1.50 an hour. His ex-boss practiced what he preached--as does Holowesko.
By Toddi Gutner
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Updated Apr. 30, 1998 by bwwebmaster
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