Report May 2019

During the month of May, Inversion Columbus fell by -6.82% compared to -5.70% for the STOXX 600, -5.92% for the IBEX 35 and -6.14% for the MSCI Mid Cap.

Since the beginning of the year, the fund is up 10.26% which exceeds the growth of the three aforementioned indices: STOXX 600 +9.30%, IBEX 35 +5.44% and MSCI Mid caps Europe +10.05%. At five and seven years, profitability has increased by 21.30% and 94.06% respectively, and since Columbus’ inception, in July 2008, profitability is 93.62%, far surpassing that of the European equity indices. The volatility of the portfolio remains at 11.7%, which is much lower than the average of recent years and similar to the volatility of the STOXX 600.

During May, global stock exchanges partially reversed the strong increases of the current year. In this last month, the commercial war between the US and China has been reignited. The US imposed more tariffs on China (and vice versa) and threatened Mexico. The refuge in this
situation has been government bonds, which in many cases have reached historical lows in their profitability. The Bond Futures price in the Federal Reserves plans to lower rates up to 3 times in the next months. The ECB has also announced measures to support the banking sector. We continue to believe that while there is an economic slowdown, we do not expect a recession.

We continue to be positioned sectorially in consumer and services companies. In contrast, we hold reduced positions in the banking, automotive, retail, natural resource and oil sectors due to their greater exposure to the economic cycle (these stocks were those that were most negatively impacted last month). We have sold our position in Rotork, thus further reducing our exposure to industrial companies.

The portfolio currently has very attractive average valuations, with PERs and EV/Ebitdas of one digit that nevertheless have double-digit sales growth and Ebitdas for the coming years. We continue to have faith in our portfolio, which is diversified into companies with high returns on
capital and cash generation, with strong growth in both sales and EBITDA for the next few years at discount prices.


Country Distribution

Throughout May, the companies in the portfolio have continued to publish their first quarter results. AKKA technologies has proven to be a standout performer (0.8% for the month, 37.3% for the year) with the French engineering company achieving revenue growth of 26% of the back of its North American division’s revenue growth of 34%. Amplifon (9.7% for the month, 44.4% for the year) has also shown significant growth. The Italian company, who are the market leaders in the hearing aid market, grew revenue and profits by 26% and 33%, respectively, to €392m and €19m. Finally, Autotrader (1.2% for the month, 21.4% for the year), the UK market leader in used car sales, published strong results with revenue and operating profits growing by 8% and 10%, respectively.

On the other hand, the Italian investment management company, Anima (-13% for the month, -14.2% for the year), reported a fall in profits as a result of a drop in performance fees. We maintain the stock due to its valuation and because we expect corporate movements in the Italian investment management sector.

Since June 14, the Master-Feeder structure between Inversion Columbus 75 Sicav (feeder) and the compartment in Luxembourg, Pareturn GVC Gaesco Columbus European Midcap Equity Fund (Master), has been operational.

This structure allows domestic and foreign investors to access the Columbus strategy from a vehicle established in Luxembourg, with two types of shares according to investment volume. The creation of this structure does not bring any kind of fiscal contingency for current investors. The sub-fund is available in the AllFunds, Inversis and MFEX fund platforms.

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