European markets were strong during April. Company reporting season dominated attention. Generally, results were positive, with a significant proportion of companies reporting increased sales and profitability, despite the rather subdued macroeconomic data of recent months.
The fund enjoyed a strong performance during the month, led by good performances from a number of our Semiconductor holdings – BE Semiconductor, ASM, ST Microelectronics and VAT Group. This is an area of the market where we continue to see good investment opportunities and supportive valuations generally. That said, VAT Group was sold following the strong share price recovery, as the valuation had become more stretched here than with the others. The reporting season has generally been positive for our holdings.
Underperformers over the month included our pharma holdings – Roche, Sanofi and Novartis. The latter spun off its Alcon business, but elsewhere there was little in the way of newsflow to explain the weak performance. We took advantage of the weakness to top up our holding in Novartis.
We lowered the financial and operational leverage of our oil services holdings by selling small positions in Fugro and Borr Drilling, and purchasing TGS Nopec. We exited Schneider (electrical products), following a positive share price reaction to results, as the valuation is no longer compelling. We also sold the small holding in Alcon we received as a result of its spin-out from Novartis. Finally, we purchased Hexpol, an international polymers business.