Report December 2021

During December Columbus European Equity Fund Class I rose by 5.45%. Over the past 12 months the Fund has risen by 21.4%, and by 65.81% over the past 3 years. Since inception in June 2008, Columbus’ return has been 190.5%, comfortably exceeding the broad European equity index. These results have been achieved with a volatility of 10.75% over the last year, lower that the one of the European equity markets at 12.0%.

European markets bounced back convincingly in December as Omicron concerns eased and business confidence measures showed continued improvement. Unsurprisingly this led to strong performances from stocks in the Leisure and Travel sectors which had been hit hardest by the arrival of the new variant. This particularly benefitted our holdings in National Express (+20.4% in the month, UK listed public transport operator), Kinepolis (+16.7% Belgium, Cinemas operator) and Talgo (+17.9% Spanish railway operator).

The largest contribution to performance, however, came from our positions in Interpump (+8.1%) and VGP (+8.7%). Interpump, the Italian listed specialty industrial group, has been a long time holding for the fund and continues to show solid growth both organically and through M&A. We supported our position in VGP, the Belgian listed logistic property developer, during November as they raised additional equity for expansion. VGP has considerable opportunity for growth in our view and continues to enter new markets with their proven strategy. The main detractor in December was S&T AG (-23.1%), the Austrian IT company, which suffered from an aggressive short attack after an independent research group published a report outlining a range of issues from the past. The company quickly responded with a detailed rebuttal, but the damage was done for December.

It is always helpful to look back over the past year to review our holdings and track our decision making. The two themes which dominated investor attention through the year were the resurgence of inflation and, of course, the pandemic. Inflation, though much discussed, had little direct impact during 2021, but may well be a bigger concern over the coming 12 months. The pandemic, however, had a more material impact on the fund as a number of our holdings experienced weakness during the summer months when the expected rebound in tourism was curtailed by the arrival of the new variant. Happily most of these stocks recovered during the second half of the year to provide a positive contribution to performance.

Adding to this was the performance boost we received from having three of our holdings taken over during the year. It is a relatively common event to lose a holding to a takeover, but to have three in one year is unusual. Amongst these, the biggest positive impact came from Zooplus, the German listed pet products group. Over the course of the year the stock rose over 180% after the original private equity bidder was challenged by other interested parties and a bidding war ensued. We eventually sold the stock when this process was complete. Akka Technologies (French digital consultancy) and Zardoya Otis (Spanish elevator subsidiary) were also both helpful contributors to performance, with Akka in particular returning around 85% for the year. Our position in Liberbank in Spain was also acquired as part of a consolidation with Unicaja Banco to create a stronger, more sustainable player in the domestic Spanish banking market. The largest negative contribution for the year came from Neoen, the French listed alternative energy group which performed extremely well in the prior year but gave back some of this performance in 2021.

As we enter 2022 we feel very comfortable with the structure of the portfolio and the combination of both value and growth opportunities that we hold. Although some extreme points across markets, such as segments of the technology sector, appear expensive relative to historical valuations this is not generally true across much of the European market. We continue to find compelling investment opportunities in often overlooked businesses and feel confident of generating strong returns in the future.

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We thank you for your trust and wish the best to you and your families during these uncertain times.

Since June 14, 2018 both domestic and foreign investors have been able to access the Columbus strategy via the master-feeder structure between the Columbus 75 Sicav in Spain (feeder) and the Luxembourg registered Pareturn GVC Gaesco Columbus European Midcap Equity Fund (master). The Luxembourg vehicle offers both institutional and retail share classes.