Why One Top International Fund Likes Novo Nordisk Stock

Novo Nordisk is “willing to move quickly and make tough decisions,” the fund managers say. Here, Novo Nordisk’s Wegovy injection pens. (Shelby Knowles/Bloomberg)

President Donald Trump’s disruptions to the global status quo have been the best stimulus for international stocks in a long time, say Matt Burdett and Lei “Rocky” Wang, co-managers of the $4.3 billion Thornburg International Equity fund.

“He didn’t realize it. But all of the challenges to the global order created this incentive for greater self-sufficiency [among other countries], as opposed to depending on the U.S.,” Burdett says.

So far, the self-sufficiency drive is playing out most clearly in Europe, Burdett says, particularly in Germany, which enacted a significant fiscal stimulus package in the spring. Burdett expects this spending will trickle down to local businesses, driving higher earnings and revenue over the long term.

“It’s very different backdrop, which should allow for more persistent earnings and a much better earnings growth gap versus the U.S.,” Burdett says.

About 50% of International Equity’s holdings are in the developed European countries, and the strength there has helped Burdett and Wang outperform in the Morningstar foreign-blend category and the benchmark MSCI ACWI ex-U.S. index.

The four-star fund is in the top 22% of its peers on a one-year basis, up 19%, versus 16.2% for the category and 19% for the index. Its 10-year annualized return is in the top 25% of peers, at 8.4%. Morningstar calls the 1.28% annual fee above-average. It has a 4.5% load that is waved at platforms such as Schwab.

Trump’s declarations, such as April’s Liberation Day tariff announcement, have caused volatile trading. That environment is tailor-made for Burdett and Wang’s bottom-up investing philosophy.

The duo uses market dislocations to find companies whose share prices are withering under a negative but temporary perception. When Burdett and Wang find an unappreciated opportunity, they review the business model’s durability and investigate if the management team is skilled enough to execute its strategy.

Using that framework, International Equity found bargains this spring in pharmaceuticals, when companies were pressured by White House comments about drug pricing. The fund topped up its holdings in British drugmaker AstraZeneca , Burdett says, lifting the drugmaker to a now-No. 4 holding.

Burdett and Wang conclude that even in a worst-case scenario, where the U.S. would only pay as much for a drug as the lowest price paid by a comparable economically advanced country, AstraZeneca had a resilient-enough balance sheet to endure the most draconian pricing.

They also added Danish drugmaker Novo Nordisk to the portfolio in May. The stock remains under pressure, but they believe Novo Nordisk is a “very good” metabolic science company that has produced value over time. The company just announced layoffs and a greater focus on diabetes and obesity, which the duo welcomes. New CEO Mike Doustdar is “willing to move quickly and make tough decisions,” Burdett says.

International Equity is a core fund, balancing growth and value, and the duo likes to shop in the quieter parts of the market. That helps to bring stability to the portfolio when the rest of the market is volatile. “Matt and I say boring is beautiful,” Wang says.

Seeking undervalued names helps them participate in rallies while also limiting downside. Morningstar says the fund’s risk-adjusted return versus peers shows that it takes an average amount of risk with an above-average return.

The managers find some of this stability in utilities and industrials, two sectors they are persistently overweight versus peers and the index. The fund’s higher utilities stake stood out as a stronger performer in 2024 and continues to underpin returns.

Burdett and Wang say the utilities sector remains attractive for several reasons: The companies have monopolies in the markets, are free from tariffs since they don’t export, and will benefit from the energy transition to renewable energy, which is happening faster in Europe. They estimate that European utilities trade at about a 40% discount to U.S. utilities.

One favorite: Spanish utility Endesa. It produces power, distributes it through its networks, and sells it to customers. The recent blackouts in Spain speak to the need for more investment, Wang says.

Industrial names are prevalent in International Equity, but Wang says the sector requires caution. “Industrials, in my opinion, are a tale of two cities,” Wang says.

Hitachi, the fund’s No. 2 holding, and Schneider Electric , No. 9, have been stalwarts of the portfolio for several years. The fund is maintaining its position in those two for now, but isn’t buying. Instead, International Equity is building positions in Canadian Pacific Kansas City, the No. 10 holding, Wang says.

The fund has owned the railroad since 2016, but the stock has been pressured because of the struggle between the U.S. and Canada. Trade between the two countries will continue to flow, perhaps at different tariff levels, as there is a need for goods carried by rail, Wang says. The fund buys on down days. “We still love this position for long-term consideration,” he says.

A recent trip to Asia inspired confidence in Wang that China’s economy is stabilizing, partially driven by stimulus, and partially by investment in artificial intelligence. Even with tariff tiffs between the U.S. and China, Wang sees promise. That trip inspired their purchase of Alibaba Group Holding in July, and Wang pointed to its recent earnings as a sign the company is improving.

Looking toward the end of the year, Burdett and Wang believe that idiosyncratic opportunities will continue to show up, since international company valuations remain cheap versus the U.S. They’re keeping 6% of the portfolio in cash as dry powder to snap up bargains. Cheaper valuations, less concentration, and diversification make international markets more attractive than the U.S.

“Those benefits have never been so appealing,” Wang says.

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