Bath/Head Office & Unquoted Equity Team:
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Edinburgh Office & European Quoted Equity Team:

MI Chelverton European Select Fund – Monthly Manager Commentary – December 2020

European equity markets continued to rise in December. Positive news regarding further vaccines against covid was, to a degree offset by the emergence of a new variant of the virus, and stricter lockdown measures being implemented across the region. The value rally, a strong feature of last month's market performance reversed to some extent, with growth outperforming value over the month.

The fund performed strongly in December. Performance over the month was driven substantially by stock-picks in our smaller companies. Good performances from Rejlers (Scandinavian technical consultants), D’Ieterin (windshield repair business) and Recticel (Belgian insulation company) highlight the diverse nature of the businesses which contributed to performance. Elsewhere, technology names within the portfolio continued to perform well, including our Semiconductor holdings – ASM International and BE Semiconductor. Detractors from performance came generally from holdings which had enjoyed a strong performance in November, most notably our financial holdings.

Acomo and UCB were new holdings initiated over the month. Acomo is an integrated soft commodities processing and trading business. It has recently acquired a leading global organic commodity business. It is attractively valued at a free cashflow yield of over 7%. UCB is a Belgian-based pharmaceutical company on a 6% free cashflow yield with a good pipeline of potential products. We view UCB as being a more focussed business with better prospects than Sanofi, which we sold in order to initiate a holding.