Bath/Head Office & Unquoted Equity Team:
London Office & Quoted Equity Team:
Edinburgh Office & European Quoted Equity Team:

Investor Information

monthly manager commentary

May 2018

European markets were lower during May, weighed down mainly by macro concerns, focussing mainly on the significant political instability in Italy. The potential implications for the third largest economy in Europe’s future within the EU unsettled markets generally, with financial stocks suffering in particular.

The fund itself fared better during the month, posting a positive result over the period. Performance was driven by strong performances from Ringmetall, Bravida, Glanbia and Subsea 7. At the other end of the performance spectrum, the main detractors were, unsurprisingly, financial companies generally and Italian stocks specifically, with Unicredit being the worst performer over the month. Our Italian holdings, which constitute around 10% of the current fund, are internationally focussed businesses, and as a result, our actual exposure to the Italian domestic economy from these holdings is much lower, at only 2.8%. Given this, we remain comfortable with our investments here and are not concerned by any indiscriminate mark-down of share prices in our companies, such as we have recently seen.

In terms of investment activity, we continue to use a steady inflow of monies to top up a number of our holdings. Also, following a very strong share price performance, the decision was taken to sell our holding in Hexpol, where the margin of safety from our analysis was no longer sufficiently attractive, compared with other opportunities. We purchased two new holdings over the month. We made an investment in ICF group, a small Italian company which specialises in adhesives to the shoe manufacturing and global automotive sectors. Also, following a company meeting, we purchased a holding in Data Respons, a Swedish IT service provider which is working with many of the large German and Swedish industrial companies on their digitalisation strategies. With a large margin of safety, double-digit top line growth and a 3.5% dividend yield, it is an addition to our mini-cluster of similar businesses including Siili Solutions and Cap Gemini.

Archive

April 2018

European markets appeared to shrug off some of the more macro/geopolitical issues which have affected them in recent times. The results season, in full swing for much of April has generally been supportive, although some areas, such as clothing retail continue to suffer poor newsflow and results. We remain cautious on a number of these traditional […]

March 2018

European markets were weaker during March, with the MSCI Europe ex UK Index falling 3.6% in sterling terms, or 2.2% in local currency terms. Markets continue to suffer as a consequence of a number of macro uncertainties. This includes the threat and consequences of US trade sanctions, Russian diplomat expulsions and fears of rising inflation. March[…]