Central and Eastern Europe Fund Holdings (Q3 2024)
Eastern European stock picks that are the holdings of the closed-end Central and Eastern Europe Fund Inc (NYSE: CEE) (including Russian stocks) plus some key Hungary economic stats & stocks.
This post takes a closer look at all the stock pick holdings (as of the end of Q3 2024) for the Central and Eastern Europe Fund and updates our post from last year - Central and Eastern Europe Fund Holdings (Q3 2023):
Central and Eastern Europe Fund Inc (NYSE: CEE)
Price/Book (Most Recent Quarter): 1.23
Trailing P/E: 5.44 / Forward Annual Dividend Yield: 3.01% (Yahoo! Finance)
Note the geographic diversity (or rather the concentration in Poland) of the closed-end fund’s holdings (albeit Moldova should really be listed as Romania):
Most stock holdings have listings on key European exchanges plus Interactive Brokers gives access to the Budapest Stock Exchange (Budapesti Értéktőzsde) and the Warsaw Stock Exchange.
Russian stocks are also still held by the Central and Eastern Europe Fund and listed in the holdings documentation, but are marked as effectively being worth zero with a zero portfolio weight (it appears most have been either delisted from the London Stock Exchange or have had their trading on there suspended). Here is the latest update regarding the fund’s Russian holdings:
📯 The Central and Eastern Europe Fund, Inc. Provides Update on Developments Regarding Russian Holdings (DWS) September 2024
As with the iShares MSCI Poland ETF (NYSEARCA: EPOL), the closed-end fund has had a large exposure to the financial sector (just not as much as the Polish ETF):
The Central and Eastern Europe Fund had taken a big hit when the Russia-Ukraine war and accompanied Western sanctions started:
And the long term performance chart:
Many of the fund’s Polish stocks (see our Poland ADRs page for more Polish stocks and investing resources) are also held by the iShares MSCI Poland ETF (NYSEARCA: EPOL) (See: iShares MSCI Poland ETF Holdings Ahead of Polish Elections (October 2023) & the just published iShares MSCI Poland ETF Holdings (November 2024)).
Our Poland ETF Holdings post covered updated Polish economic data; but here is some key Hungary economic data (see our Hungary ADRs page for more Hungarian stocks and investing resources):
Last year’s post plus our some of our Monday emerging market link collection posts had noted these articles from Undervalued Shares which discussed their Hungary visit and also mentioned a few Hungarian stocks:
💻 Hungarian stocks – worth a closer look? (Undervalued Shares) September 2023
There is still a decent amount of research available about MOL Magyar Olaj- és Gázipari Nyilvánosan Muködo Részvénytársaság (BSE: MOL / FRA: MOGB / MOGG / OTCMKTS: MGYOY) (ISIN HU0000153937, BUD:MOL), the state-controlled oil company, Magyar Telekom (BSE: MTEL / LON: 0NUG / FRA: MGYB / OTCMKTS: MYTAY) (ISIN HU0000073507, BUD:MTEL), the national telecoms operator, and OTP Bank (BUD: OTPB / FRA: OTP / OTCMKTS: OTPBF) (ISIN HU0000061726, BUD:OTPB), Hungary's leading bank.
When it comes to MOL's equity, the valuation multiples of its stock are comparable to those of emerging market companies, such as Petrobas (NYSE: PBR / PBR-A) (ISIN BRPETRACNPR6, BR:PBR). Hungary does bear some hallmarks of emerging markets, such as a high inflation rate. On the other hand, it is a European country and a member of the EU.
I suspect that Hungary will offer some surprising finds, such as Kulcs-Soft (BUD: KSOFT / LON: 0MLL) (ISIN HU0000099387, BUD:KSOFT). The specialist for accounting software listed on the Budapest Stock Exchange in 2009, and has since grown its earnings per share at a compound annual growth rate of 19.1%. Kulcs-Soft has paid out every cent of its profits to shareholders as dividends, and not utilised debt or capital issuance.
💻 Hungary Investment Trip - What We Learned (Undervalued Shares) October 2023
The Budapest Stock Exchange has 151 listed companies. If you ask anyone about Hungarian stocks, OTP Bank (BUD: OTPB / FRA: OTP / OTCMKTS: OTPBF) (ISIN HU0000061726, BUD:OTP) is one of the two they are likely to mention first. Hungary's leading bank makes up 30% of the Hungarian market's entire market cap.
ANY Security Printing Company / ANY Biztonsági Nyomda Nyrt. (BUD: ANY / LON: 0JC5) (ISIN HU0000093257, BUD:ANY) once was the "State Printing Company of Hungary". However, it was privatised a long time ago and has since transformed its product line from traditional printing products to secure identification documents on paper, out of plastic, and digitally.
Erste Group Bank AG (VIE: EBS / FRA: EBO / EBOR / ETR: EBO / OTCMKTS: EBKDY) (ISIN AT0000652011, VIE:EBS) is the opposite to ANY, inasmuch as it's a highly liquid stock of a company that has huge brand name recognition. In Central and Eastern Europe, "Erste" is one of the top brand names in banking (despite the fact that only German speakers will realise the name stands for "First").
Interestingly, even the Budapest Stock Exchange (Budapesti Értéktőzsde) (BSE: BUD) (ISIN HU0000063078, BUD:BET) itself is now a publicly listed company.
Other companies that we visited included Magyar Telekom (BSE: MTEL / LON: 0NUG / FRA: MGYB / OTCMKTS: MYTAY) (ISIN HU0000360128, BUD:MTELEKOM), the former national telecoms operator.
MOL Magyar Olaj- és Gázipari Nyilvánosan Muködo Részvénytársaság (BSE: MOL / FRA: MOGB / MOGG / OTCMKTS: MGYOY) (ISIN HU0000153937, BUD:MOL) is the other obvious stock to pick when seeking exposure to the Hungarian market, given that it single-handedly contributes 20% of the market cap of Hungary's publicly listed company sector (see also my recent Weekly Dispatch on Hungary for a more extensive assessment of the gargantuan oil and gas company).
However, both Poland and Hungary are on the front lines of any US-NATO-EU conflict in the Ukraine with Russia (e.g. Galicia and Transcarpathia were carved up after and between World War I and II, leaving a large Hungarian minority population living in Ukraine, while the Lviv region had belonged to Poland between the wars…).
To make your life easier, the rest of this post has a much shorter stock description (from our Emerging & Eastern Europe Stock Index) to make the whole post easier to skim through (an autogenerated Substack table of contents with the names of each stock holding will appear as small lines on the left side of desktop browsers) and includes:
🌐🌏 etc. This is fairly subjective as, for example, many stocks are part of global supply chains rather than purely domestic companies.
🏛️ State owned, controlled, or influenced companies.
👼🏻 ESG friendly stock e.g. renewable energy. This is fairly subjective.
🅿️ Preference shares available (Note: I don’t see a comprehensive list of preference shares or preferred stocks readily available on the Internet…).
A very short description of the stock with links to the IR page and stock quote(s) on Yahoo! Finance or other sites.
Any Wikipedia page (denoted by 🇼) and a Substack stock tag link (denoted by 🏷️) linked to any post under EM Stock Pick Tear Sheets.
A price/book (most recent quarter) ratio plus forward or trailing P/E and dividend yields linked back to the Yahoo! Finance statistics page.
The latest long term technical chart linked back to Yahoo! Finance. Note: Charts for Warsaw Stock Exchange listings have trouble appearing on some browsers (or will not appear when Yahoo! Finance is set to classic mode).
And as always, this post is provided for informational purposes only (and to make your life easier by providing you with relevant information, links, and charts). It does not constitute investment advice and/or a recommendation…
Finally, note that our Emerging & Eastern Europe Stock Index has been cleaned up and updated:
Eastern Europe & Emerging Europe
🇦🇹 Austria
Erste Group Bank AG
🇪🇺 Erste Group Bank AG (VIE: EBS / FRA: EBO / EBOR / ETR: EBO / OTCMKTS: EBKDY) - First Austrian savings bank. 7 countries. Erste Group is one of the largest financial services providers in Central & Eastern Europe. 🇼 🏷️
Price/Book (Most Recent Quarter): 0.89
Forward P/E: 5.08 / Forward Annual Dividend Yield: 5.22% (Yahoo! Finance)
OMV AG
🌐👼🏻OMV AG (VIE: OMV / FRA: OMVI / ETR: OMV / OTCMKTS: OMVKY / OMVJF) - Austria’s largest listed industrial company. As a global energy & chemicals company. Leading provider of sustainable fuels, chemicals & materials. 🇼 🏷️
Price/Book (Most Recent Quarter): 0.74
Forward P/E: 5.16 / Forward Annual Dividend Yield: 7.68% (Yahoo! Finance)
🇨🇿 Czech Republic
CEZ as
🇪🇺🏛️ CEZ as (PSE: CEZ / WSE: CEZ / FRA: CEZ / OTCMKTS: CZAVF) - Generation, distribution, trading & sale of electricity & heat; trading & sale of natural gas; provision of comprehensive energy services from the new energy sector & coal mining. One of the 10 largest energy companies in Europe. 🇼 🏷️
Price/Book (Most Recent Quarter): 2.13
Forward P/E: 16.47 / Forward Annual Dividend Yield: 5.51% (Yahoo! Finance)
