Some big mutual funds are making plays that look likely to bolster Global Income Edge holdings next year. It’s always nice when managers of multi-billion funds come around to our way of thinking. And those billions streaming into our portfolio stocks can only boost their prices.

 Several large-fund managers interviewed in the Dec. 22 edition of Fortune magazine advised investors to buy European multinationals, foreign global consumer companies, and high-end multinational consumer discretionary firms – the type of investments that can be found in Global Income Edge.  

 If you’ve been a GIE subscriber for a while, this should sound familiar. Here are some quotes from the Fortune article, on European multinationals:

• “Companies with global operations that just happened to be domiciled in Europe [have been unfairly maligned].” Rob Taylor, co-manager of the $29 billion Oakmark International Fund.

• “We’re not investing in a government, an economy, or a GDP. We’re investing in a business. Is Germany going to go into a recession again? Interesting question. But it really has nothing to do with whether a company is cheap.” Katrina Dudley, co-manager, $ 2.7 billion Franklin Mutual European Fund.

• “Now we’re buying European multi-nationals mostly for the global recovery, because they have been globalizers forever.” Jay Bowen, manager of the $2.7 billion Bowen Hanes & Co. fund.

A New Strategy for Investing

Looking back at 2014, success in the market was a balance between finding value based on a company’s own merits, and finding value based on broad market dynamics. Those that pursued one strategy didn’t perform as consistently as those who used both. And I think this balance  will be even more needed in 2015.  

And all the major investing trends, including momentum investing, trend investing and fundamental valuation, point to a resurgence in European multinationals as the European recovery is inching closer to reality.

We were extremely pleased to see that in the Fortune article that John Stoltzfus, chief market strategist for Oppenheimer, also sees potential in Global Income Edge Aggressive Portfolio holding Banco Santander (NYSE: SAN), which we added to our portfolio on Oct. 30. 

He makes the argument in the article that the MSCI European index has a price/earnings ratio of 15; compared with 17 for the S&P 500 – suggesting the European multinational sector is undervalued. Of course, he’s preaching to our choir, and if that thinking brings billions more into the European stocks we like, hallelujah.

We’re also quite pleased to see the general positive attitude of the other funds toward European multinationals, which we view as a good sign for many of our portfolios holdings for 2015. You’ll remember, our central thesis is that multinationals are best positioned to deliver the world’s best income returns.    

As we noted in our November issue, Banco Santander is one of the largest financial institutions in the world, with more than 13,000 branches globally and a particularly strong presence in Latin

America. In fact, its Latin American operations have been responsible for about half of the bank’s profits over the last three years, making it one of just a few Spanish banks that have continued to make money during the crisis.

In the third quarter of this year, the bank’s profit actually rose 52%, coming in at about $2 billion, its highest level in more than two years. Much of that gain comes from international operations. Profits rose by 34% in Great Britain, while Latin American profits grew 9%. But the more important news is that third-quarter earnings in Spain more than tripled, reaching $384.3 million.

While the Spanish economy is hardly in the pink, it has improved; the bank has reduced the money it’s set aside to cover bad loans by 8%, to $3.5 billion. All these profitable developments give us faith that the 6.94% dividend is secure. Banco Santander is a Buy up to $10