Report November 2020
During November the Columbus Fund rose by 13.1%, slightly behind the 13.5% increase in the MSCI Mid Cap and 13.8% in the STOXX 600. Over the past six months the Fund has risen by 17.7%, and by +60.31% since the market’s low on March 18th. Year to date Columbus is also comfortably back into positive territory with a return of 1.7%, ahead of the -1.6% decline in the MSCI Mid Cap index and ahead of the -5.8% fall for the STOXX 600. Since inception in June 2008, Columbus’ return has been 121%, comfortably exceeding the broad European equity index.
Going into November most market commentators were focused on the US elections and the potential for instability in the case of a contested outcome. Despite this playing out as many had feared, the period of uncertainty had little or no impact on financial markets and by the end of the month the transition to a Democrat Party presidency had officially begun. For financial markets this news was overshadowed by the raft of positive vaccine news that came out during the month. Earlier in the year there had been genuine scepticism around whether a vaccine could be found at all, and any success being likely 18-24 months away. In this context it is easy to understand the very positive market response to 3 different vaccines being announced in such a short space of time. Clearly a remarkable achievement from the healthcare sector and demonstrates yet again the amazing achievements possible when the human race is faced with a problem. The travel and leisure, retail and even oil and gas sectors which had lagged over the year, rose sharply as investors looked beyond the current lock-downs towards a hopefully more normal 2021.
While there were no new positions started in November, however, we did finish acquiring our new holding in Zooplus, the German listed online pet supplies retailer. The group is the leading ecommerce petfood retailer in Europe with just over 50% of the online market. They sell into 30 countries across the region through two online brands, Zooplus and Bitiba and have shown consistently strong revenue growth. Customer retention rates are high with 91% of sales recurring, but with only ~15% of petfood sales currently online they have considerable scope for further expansion. The recent pandemic is likely to have been a positive environment for the group with both pet ownership and online shopping penetration having risen throughout.
The strongest contributions to performance in the month unsurprisingly coming from some of the more cyclically sensitive holdings. Akka Technology (French listed, engineering consultancy), Edenred (French, business services) and Fraport (German airport operator). We added Fraport to the fund in the early period of the pandemic when the valuation had collapsed in-line with air traffic. In our view the market was taking a very short term perspective towards a key asset in the European transport network which is virtually irreplaceable. Even after the very strong returns we have seen so far there remains significant further upside for the stock to regain the level of trading from before Covid. The most significant detractors, by contrast, were Rentokil (UK listed, pest control) and YouGov (UK, media services), both of which had outperformed in the period before the vaccines were announced and likely suffered some profit taking as investors raced towards the more cyclical sectors.
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.
