European equity markets posted modest gains over the month. Focus was generally on Q4 results season, and the varied effects which numerous macro factors, including cost inflation, cost of capital, consumer demand, Industrial demand and supply chain issues are having on companies generally. Unsurprisingly, results were mixed, hence fairly directionless markets.
The fund also posted modest gains over the month, and, similar to the market generally, experienced a range of both positive and negative results announcements from our holdings.
Notable contributions to performance came from two of our holdings within our digitalisation cluster. TXT is a technology company with particular exposure to the finance and defence sectors, both of which are very much in investment mode, hence demand for its products and services remains very strong. Cyberoo is a leading provider of managed detection and response products for cybersecurity and is experiencing very strong demand. The fund also benefitted from good performances from two of our Commodity and energy transition themed holdings, Brunel (staffing services to energy and commodities sectors) and TGS (provision of seismic services to the energy industry) – both of these companies reported very strong results.
Our four largest detractors from performance also came from holdings within our digitalisation cluster. Huddly (meeting room camera technology) had a disappointing trading update, and management has been replaced. Avensia (IT services to the retail sector) had a disappointing final quarter of the year. EQS (regulatory technology) suffered a setback as key legislation was delayed in Germany. Finally, Fabasoft (document management and search engine software) was weaker following results, despite showing strong growth.
Over the month we added three new holdings to our commodity and energy transition cluster. Eurogroup Laminations is a world leading supplier of rotors to electric motors, and counts the majority of global EV manufacturers as clients. Zaptec is a leading European provider of EV charging technology. La Francaise de l’Energie recycles gas extracted from former mining sites into electricity. As such it is a negative carbon footprint producer.