European markets had a strong start to the year. Many stocks/areas of the market which were indiscriminately sold during the final quarter recovered, at least to some extent. There was also less in the way of poor macro-economic newsflow for markets to contend with – for example US/China trade talks are ongoing and the rhetoric is, so far, mildly positive. Although the recovery in European indices feels somewhat fragile, markets do appear to have found support levels.
The fund had a positive start to the new year. Our oil service companies staged a decent recovery, as the oil price recouped some of its heavy losses sustained in the fourth quarter of 2018. Fugro and Subsea 7 were notably strong over the month. BE Semiconductor Industries also performed strongly over the month, and we continue to see good value in this area of the market. Akka Technologies, Post NL and Dometic also enjoyed good share price performances over the month. Laggards, in performance terms, tended to be the less cyclical companies which we hold, including pharma stocks such as Sanofi and Novartis, and defensive names such as Unilever.
We made one new investment over the month, purchasing ASM International, a leading semiconductor equipment manufacturer, where the valuation is depressed, despite the positive long-term prospects for the business.