Spanish stocks tend to have a relatively small presence in the portfolios of European equity funds with a value bias. According to Morningstar data, Spanish equities account for just around 5% of the assets of funds in the Europe Large-Cap Value Equity category.
To find out which Spanish companies are attracting the attention of some of the continent’s most successful value investors, we looked at the latest portfolios. To isolate the top stock-pickers among current active fund managers, the screened focused on:
- Actively managed funds that land in the Europe large-cap value equity .Morningstar Category
- Funds with at least one share class earning a of Gold, Silver, or Bronze.Morningstar Medalist Rating
- Funds that hold 100 stocks or fewer as of their most recently reported portfolios.
In total, six separate fund portfolios made the cut.
2 Spanish Stocks That the Best Fund Managers Have Been Buying Lately
Here are some of the stocks that top managers have been investing in during the past few months:
All of the stocks that top managers have been buying look undervalued, according to Morningstar.
Merlin Properties Socimi
- Number of Best Managers Buying the Stock: 1
- : ★★★★Morningstar Rating
- : NoneMorningstar Economic Moat Rating
- : Real EstateSector
The best fund managers’ top stock pick during the last quarter was Merlin Properties Socimi, the only real estate name on the list. Morningstar thinks this mid-core stock is 22% undervalued.
Merlin Properties is aggressively scaling its data center portfolio to be the primary revenue driver; data centers are forecast to account for 65% of gross rental income by 2032. This strategy leverages Iberia’s relative advantages over legacy European hubs: land and energy abundance and subsea cable connectivity. Meanwhile, the group maintains its position in traditional asset classes (offices, logistics, and shopping centers).
This Mega Plan is the primary growth driver over our 10-year explicit forecast. Phase I (64 megawatts) is fully let, phase II (254 MW) is underway, already anchored by the largest data center lease in Iberian history, and phase III (412 MW) has been launched to capture surging artificial intelligence demand. Merlin has secured the power and land for phase IV (1.4 gigawatts), but the EUR 15 billion project will require additional funding, even though construction on the first 200 MW has begun. Beyond phase IV, Merlin has a 3-gigawatt pipeline split into short- and long-term projects (1.1 GW and 1.9 GW, respectively). Long-term sites use optioned land and require substantial infrastructure work, while short-term sites use owned land and don’t require such work. Both await power approval.
For its data centers, Merlin leases entire buildings or data halls to hyperscalers and neoclouds on long leases (10-plus years), deliberately avoiding retail co-location. It acts as the facilities producer, providing the box and the critical cooling systems and power, while the tenant provides the actual computing hardware. It directly draws power from generators, allowing tenants to bypass public grid tariffs. Merlin also retains responsibility for mechanical and electrical maintenance.
Merlin’s offices prioritize prime assets and the reconversion of noncore stock into residential uses. Logistics leverages its urban footprint, with asset leases to third-party logistics and retail giants such as Inditex and XPO. Merlin targets flagship and leisure shopping centers.
Jack Fletcher-Price, Morningstar analyst
Read more about Merlin Properties Socimi here.
Telefónica
- Number of Best Managers Buying the Stock: 1
- : ★★★★Morningstar Rating
- : NoneMorningstar Economic Moat Rating
- : Communication ServicesSector
Telefónica rounds out the list of stocks that the best fund managers have been buying. Morningstar thinks shares of this stock are 13% undervalued.
After expanding to many European and Latin American countries during the 1990s and 2000s, Telefonica turned around its strategy to focus on four key markets: Spain, the United Kingdom, Germany, and Brazil. Telefonica is divesting or restructuring its Latin American operations (except Brazil) and selling infrastructure assets such as towers or noncore fiber networks, and intends to use the proceeds to reduce debt. Marc Murtra, CEO since 2025, is pushing for market consolidation across Europe, a move we look favorably upon, although we don’t have high hopes from a regulatory perspective.
We believe Telefonica is lacking in more ambitious cost reductions. The 2028 strategic plan guides for both 2025-28 revenue and EBITDA CAGRs of 1.5%-2.5%, implying no margin expansion. It also projects meaningful growth from digital services like cybersecurity, a low-margin segment we see as commoditized, and where Telefonica is mostly an integrator/reseller of third-party technology.
In our view, the merger of Orange and Masmovil won’t bring structural benefits to the Spanish market, as Digi became a new mobile operator as a condition for the deal. In the meantime, Digi has national roaming agreements with both Telefonica and Orange, allowing a very gradual network rollout while maintaining low capital intensity. Digi is known for its aggressive competitive behavior, and it will likely bring further pressure to the market. Among the three large Spanish providers, Telefonica is better shielded, given its network superiority and higher pricing underpinned by proprietary content.
In Germany and the UK, Telefonica is overall in good shape, although it still lags Deutsche Telekom and BT Group, respectively. In the UK, where Telefonica has a joint venture with Virgin Media, competition is heating up in the broadband market, given that lots of smaller, regional operators continue to overbuild fixed networks.
Latin America has historically suffered poor returns on invested capital, and we don’t expect this to change. Macroeconomic weakness and currency depreciation normally wipe out any growth in currency-adjusted terms. Telefonica is actively divesting assets in this segment.
Javier Correonero, Morningstar senior analyst
Read more about Telefónica here.
How Do We Determine Which Stocks the Best Managers Are Buying?
To determine which stocks top managers are investing in, we compared the latest portfolios of these funds with their portfolios three months before. We then calculated a “buy score” for each stock, which is a weighted average that allows us to make apples-to-apples comparisons of the most purchased stocks. One or two managers making large purchases of a stock could lead to the same buy score as many managers purchasing small amounts of a stock.
