Fund starts year on a positive note


27 Feb 2018


The Fund was up +2.45% in January, outperforming the European financial markets which also performed well during the month, with the Fund’s benchmark returning +1.66%. Norma was the largest monthly performance contributor, followed by Boozt and Alten. Tarkett, Spie and Balta were the three largest detractors.

Despite two guidance upgrades during 2017, Norma pre-announced stronger than expected sales growth for FY17 in January. With an organic growth of 8.5%, the increase surpassed the upper end of Norma’s guidance of 4-7%, thanks to outstanding performance in Q4. Boozt continued its stock price recovery, which started in November last year, with no specific news released. Very similar to Norma, Alten reported better than expected numbers for Q4, with a sharp acceleration in growth and recruitment, enabling management to be confident with regard to 2018 growth prospects.

In January, the main detractors all suffered from brokers’ downgrades, which however have not changed the Investment Adviser’s opinion regarding these companies. To the contrary, the pullback in stock prices enabled the team to increase position sizes at more attractive levels.

Overall, the number of positions remained constant in January, with the team initiating two new positions and at the same time selling Mersen and Kendrion during the month.

Mersen and Kendrion were strong performers in 2017, contributing respectively +2.69% and +1.70% to the Fund’s gross performance during the year. Kendrion returned +54.1% (with dividends reinvested) in 2017, whilst Mersen was up +87.0%. The latter was the largest contributor to 2017’s performance as a result of several profit and sales growth upgrades throughout the year. As always, the Investment Adviser has remained very disciplined with regard to entry and exit prices, however recently decided that the upside potential was no longer sufficient to justify maintaining these two holdings in the portfolio.

Two new positions have been initiated, additional information regarding these will be provided when they have reached the desired weighting within the portfolio.

The views and statements contained herein are those of Pascal Investment Advisers SA in their capacity as Investment Adviser to the Fund as of 07/02/18 and are based on internal research and modelling.