Report January 2024

Columbus class I is down 0.36% in January 2024 and up 12.88% in the last three months. The year started mildly down but has gradually recovered since then with a little more volatility than we expect in the long-term. Performance for the last 3 months is in line with the European markets. Since its inception in June 2008, Columbus has returned 114.7%, far outperforming European equity indices.

Interest rate volatility has been the most relevant topic lately. The strength of the American economy has caused the market to adjust its expectations of interest rate decline to further in the future. Inflation is going in the right direction, but the economy remains at full employment and the FED has expressed some caution when it comes to lowering rates. Rates are very relevant for asset pricing and will inevitably mark the evolution of mid-caps, especially in Europe where valuations are very attractive. Investors remain on the sidelines while the opportunity to buy good companies in Europe remains very attractive.

Market consensus expects the economy to decelerate moderately in 2024 and rate cuts in the second quarter of the year, which should be a favourable driver. The risk of a macro adjustment remains there but has been postponed, in any case we are not taking much cyclical risk. In this environment, we are convinced that the Columbus portfolio is well positioned with companies with high margins, not excessively cyclical and healthy balance sheets.

Regarding the Columbus portfolio, three companies stood out during this month for all of them stocks with good long-term expectations such as Buzzi (+14.5% in January), Reply (+6.7%) or Elementis (+11.65). Also, stocks that we bought after their poor performance in 2023 have also rebounded as our investment case is being confirmed, such as the case of Teleperformance (+10.3%). One of our stocks, Elementis, has received an offer that has so far been rejected by its board on valuation grounds. We expect that corporate operations will continue to be active in small and medium company segment.

We would like to end with a comment on Grifols, a stock that has suffered a notable correction during this month due to a sell report. Columbus initiated a position in the stock in the third quarter of 2023, following a significant stock price decline, despite solid signs of operational and management improvements. We have studied the business in depth, it has barriers to entry and high returns, but the management team and the balance sheet needs to improve. Our position had a very good revaluation in 2023 but January events had a 1% cost in the portfolio. We maintain the position waiting for 3 catalysts in 2024: operational improvement, debt reduction and improvement of its governance.

 

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The Columbus Fund can be purchased through the AllFunds, Inversis and Fundsettle platforms. Columbus has a Master-Feeder structure. The Pareturn GVC Gaesco Columbus European Equity Fund in Luxembourg (master) and the GVC Columbus European Equities FI fund (subordinate). The Luxembourg vehicle offers institutional and retail share classes denominated in euros and sterling.