Broader European indices were lower over the month of August. Results season continues to be mixed in terms of company updates for the market generally. Smaller companies continued to lag larger companies over the month.
The fund was also lower over the month, underperforming the broader indices as a result of our bias towards smaller companies.
Positive contributions to performance came from Arcadis (environmental consultant/engineering), after posting positive results at the end of July. Amadeus Fire (recruitment and training) and Kaufman and Broad (housebuilding) advanced, as did two of our software holdings, Pagero (business to business communication software) and EQS (compliance software).
In terms of detractors, Ox2 (wind and solar developer) performed poorly despite positive results as the market continues to be concerned that higher interest rates may deter buyers of renewable assets. Enad Global (games developer) was a negative contributor, as a governance issue overshadowed otherwise strong results. AMG Critical Materials (lithium production and processing) continued to be weak for a second month, following last month’s news of short-term technical issues at one of its recycling plants. Huddly (meeting room cameras) was also down over the month, following results which gave little update on new product penetration. We continue to back all these companies on a long-term basis and have topped up three of these four detractors.
We continue to see significant valuation support in the portfolio and are using short term share price weakness to add to a number of our positions. There were no new additions over the month. We exited our holdings in Ordina and Digital 360, following takeover approaches for both, feeling that the cash could better be recycled into existing holdings, a number of which have been underperforming.