Bath/Head Office & Unquoted Equity Team:
London Office & Quoted Equity Team:
Edinburgh Office & European Quoted Equity Team:
MI Chelverton European Select Fund – Monthly Manager Commentary – December 2021

MI Chelverton European Select Fund – Monthly Manager Commentary – December 2021

European markets finished the year strongly, with a positive performance in December. This was despite the ongoing headwinds of the Omicron variant and also broader supply chain issues. Small caps again lagged the performance of their larger peers.

The fund also had a positive month in terms of performance.

Notable contributions to performance came from a variety of businesses. Ordina and Infotel (both IT services) performed strongly in December, having sold off in November for no apparent reason. Kinepolis (cinemas) also recovered strongly as cinema opening restrictions in the Netherlands were eased. Kaufman and Broad (French housebuilder) also recovered following news that a planning appeal on a major development had been decided in their favour.

Detractors from performance over the month worth note came from Media and Games Invest (online gaming and marketing), whose decision to purchase a strategic stake in a struggling competitor was poorly received by the market. BE Semiconductor (equipment manufacturer) and Init Innovation (digital transport solutions) were also weak, with both alluding to short term supply chain issues.

Over the month, the fund exited its holding in Zardoya (elevators and escalators) which had been a source of cash following a bid approach from its parent. We also exited our holding in Banca IFIS following a very strong share price performance.

We enter 2022 with an attractive balance in the portfolio between exciting, undiscovered smaller companies with very attractive growth prospects and high-quality larger companies. Strong balance sheets will continue to be a prominent feature of our investments. We are continuing to find significant opportunities and mispricings further down the market cap spectrum and look forward to a positive 2022.