A bigger bet on European stocks in the last quarter helped U.S. hedge fund Viking Global Investors improve returns after a difficult start to the year.

“Notably, both net and gross exposure to European companies increased by 11 percentage points as we added longs in several sectors,” the hedge fund told investors in a quarterly letter dated Oct. 14 and seen by Reuters on Monday.

Viking’s flagship Viking Global Equities fund is now roughly flat for the year, trailing the HFRI Composite Index’ 4.15 percent gain. During the third quarter, Viking’s 5.7 percent gain helped wipe away much of the first quarter’s 8.3 percent drop.

Andreas Halvorsen, Viking’s founder, said European stocks are still more attractively priced than stocks in other regions. “This increase does not represent a top-down macro bet on the European economy but reflects strong idea flow from our analysts covering European stocks and a general observation that valuations are relatively attractive in that region compared with other parts of the world.”

Viking listed only one European stock – English-Swedish pharmaceutical company AstraZeneca – among its top 10 investments.

Amazon.com (NASDAQ:AMZN) remains Viking’s single largest bet, followed by Alphabet (NASDAQ:GOOGL) Inc and Facebook (NASDAQ:FB). Amazon also ranked as the fund’s best performer, contributing 1.2 percentage points to gains.

Canadian oil and gas exploration and production company Encana also performed well. Viking said it built a large position early in the year when oil and gas prices fell and says the stock has room to rise

With $33 billion in assets, Viking has long been counted as one of the industry’s biggest and most successful hedge funds, lining up institutional investors such as pension funds. But recent performance has hurt the firm some. Last week the state of Rhode Island asked the firm to return $51 million, half of the money it manages for the state.

Source: Reuters

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