Tag Archive for: Columbus European Mid-Cap Equity

In September 2024, Columbus Class I2 fund recorded a slight decline of 0.2%. This month has been challenging for global markets, and Columbus has maintained a performance in line with its benchmark index, the Stoxx 600, which retreated 0.4%. Since its inception in June 2008, the fund has achieved a return of 146%, outperforming the major European equity indices.

Market conditions: September was marked by key events: the US Federal Reserve’s rate cut and the strong rebound in the Chinese market, which responded positively to public stimulus after a previous decline. In addition, good inflation data and the reduction of long-term rates to annual lows helped to stabilize the markets, although the deterioration of the situation in the Middle East generated uncertainty. Globally, the main stock market indexes showed moderate gains (Stoxx50: +1%, S&P 500: +2%, Nasdaq: +3%).

Opportunities in Sight: At Columbus, we identify interesting opportunities, despite a challenging macro environment. The interest rate cycle is acting as a support, and valuations in Europe are particularly attractive. Although volatility persists, we continue to find great value in European companies with global growth potential.

Performance of Relevant Positions: In September, the positive performance of Siemens Energy (+26.9%), Mobico (+7.8%), Interpump (+5.4%) and Trainline (+9.8%) stood out. In contrast, YouGov experienced a drop of 10.9%, affected by a competitor’s profit warning.

New Investments: We have added two new strategic positions in Cellnex and Acciona Energía. Both companies have solid assets, improved cash generation and attractive valuations that ensure a positive evolution in the coming years.

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Since May 2023, Spanish investors can access the Columbus strategy through the Spanish fund GVC Columbus European Equities FI. The 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 (feeder). The Luxembourg vehicle offers institutional and retail share classes denominated in euros and sterling.

Pareturn GVC Gaesco Columbus European Equity Fund class I2 is down 0.36% in August 2024, while up 5.8% over the past six months. August has been a volatile month in the markets, but Columbus has performed steadily. Since its inception in June 2008, the Columbus I2 class has gained 148%, outperforming European equity indices.

August was a difficult month for the markets for various reasons, such as the situation in Japan and employment in the US. The stock markets suffered a sharp correction in the first days of the month (Stoxx50: -6%, Nasdaq: -8%), although they recovered as the days went by. This correction is an indication that the valuations of some assets, especially in the US technology sector, are excessive. At the same time, the US economy is showing signs of exhaustion.

Fortunately, the interest rate cycle is about to turn, which provides good support for the markets and smallcaps in particular. In Europe, valuations are more than reasonable, and we continue to find a lot of value in good European companies that manage to grow globally in a not entirely favorable macroeconomic environment, with very good returns on capital and solid cash flow generation.In August, we have had a good performance in relevant positions such as Kinepolis (+9%), Reply (+9%), YouGov (+8%) and Dalata (+7%). We have also seen a significant rebound in two positions that until now had penalized us: Mobico (+21%), which released good results, and Grifols (GRFB +16%, GRFA +8%), where the process for a potential takeover bid continues. On the negative side, this month has been difficult for Teleperformance (-17%) due to a change of management, and Trainline (-11%) and Kontron (-14%) also fell despite reporting good results.

We have initiated new positions in the portfolio which we will discuss in the coming months. We are also reducing our exposure to the financial sector.

 

Download monthly factsheet [PDF]

 


Since May 2023, Spanish investors can access the Columbus strategy through the Spanish fund GVC Columbus European Equities FI. The 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 (feeder). The Luxembourg vehicle offers institutional and retail share classes denominated in euros and sterling.

Pareturn GVC Gaesco Columbus European Equity Fund class I2 is up +3.3% in July 2024 and +5.0% over the last three months. July has been a positive month for the Fund. Since its inception in June 2008, Columbus I2 class is up 149%, outperforming European equity indices.

July was a good month for the Fund, especially in relative terms (Stoxx 600: +1.3%). Throughout 2024 we have benefited from several IPOs such as Salcef and Neoen but we have suffered in some positions that are now starting to recover. A prime example is Grifols which rose +18% in July (+27% in Grifols B) a complex situation but where we have a good entry price. Although there is the possibility of an opportunistic public offering by the Brookfield fund, which could benefit us, we believe that the long-term evolution of the company has more potential.

In July, we also had a good performance in relevant positions such as Fresenius, which rose +19%. We have increased our investment in this company, as we continue to see great potential with low risk. Other companies that also performed well were Hiscox (+11%) and Elementis (+10%), both mentioned in the press due to speculation about possible bids. Mobico (+10%) and Teleperformance (+21%) also recovered; although the latter had experienced a notable correction in previous quarters, we still see potential in them.

On the negative side, we had a negative result with Scor (-16%), which issued a profit warning. So far, the reinsurance company had performed well. In this case, we believe that the company’s risk management has proved to be insufficient. We also continued to reduce the position in Unicaja as we believe that after the 47% rise in the year it has a reduced capacity for revaluation. We have initiated two positions in the portfolio which we will discuss in the coming months.

 

Download monthly factsheet [PDF]

 


Since May 2023, Spanish investors can access the Columbus strategy through the Spanish fund GVC Columbus European Equities FI. The 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 (feeder). The Luxembourg vehicle offers institutional and retail share classes denominated in euros and sterling.

Pareturn GVC Gaesco Columbus European Equity Fund I2 is down 5% in June. Since its inception in June 2008, Columbus is up 141% outperforming major European equity indices.

June was a negative month for the Fund after a good May, when it benefited from the Neoen takeover bid. The most relevant factor in June was the correction in French equities, which also affected other assets in Europe. The fund’s actual exposure to France is relatively small if we analyse the percentage of sales (around 5%). However, the exposure to French listed companies is higher (12% of NAV), but the companies we hold in our portfolio (e.g. Edenred, Neoen, Scor) are highly diversified global companies. We expect that when the election noise settles down, the valuations of these good companies will return to normal levels.

In June, we also had a good performance of relevant positions in the Fund, such as Reply (+9%) and EFG International (+9%). In the latter case, the press highlighted a potential merger operation that has not been executed so far. On the negative side, there was a profit warning in YouGov (-59%), until now a success story in data analysis that has suffered a slowdown in demand from corporate clients. The positions in Wise plc (-16%), Scor (-11%), Bodycote (-10%) and Edenred (-9%) also suffered this month. Grifols deserves special mention (-16% in the month of June), although it has strongly recovered in recent days following positive newsflow on the company.

This month, we have neither increased nor taken new positions.

 

Download monthly factsheet [PDF]

 


Since May 2023, Spanish investors can access the Columbus strategy through the Spanish fund GVC Columbus European Equities FI. The 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 (feeder). The Luxembourg vehicle offers institutional and retail share classes denominated in euros and sterling.

Pareturn Columbus class I is up +7.15% in May 2024 and +8.36% in the last three months. Since its inception in June 2008, Columbus class I has risen 153.8%, outperforming the European equity indices.

May was a positive month for Columbus. The Fund benefited from the takeover bid for Neoen, the French renewable energy company, with a premium of 27%. Neoen is the only position we hold in the power generation sector and has received a takeover bid from Brookfield, an infrastructure fund, and its largest shareholder. This is the second takeover bid for a Columbus company in recent months. In April, Salcef, an Italian rail infrastructure company was also bought by another infrastructure fund and the controlling family. It is not surprising that corporate activity in European midcaps is returning for two reasons: there are good opportunities in quality companies, and there is financing at acceptable prices for these deals.We have also had a good evolution of relevant positions in the fund such as Siemens Energy (+29% in the month), Prysmian (+18%) and Befesa (+19%) and Kontron (+14%). In these three positions we had increased our position in recent months, it is satisfying to see how we are adapting the positions we hold in companies that we follow closely. On the negative side, the positions in Scor (-12%) and Kinepolis (-9%).

We have also reduced positions in Unicaja, Buzzi and Senior, as we consider that their share price already reflects the valuation we attribute to them. We have taken positions in 3 other stocks which we will discuss in future communications.

The takeover bids we have received in Neoen and Salcef are an indication that there is a lot of value in Europe. The stability of the euro is also a good reference, as are interest rate cuts by the European Central Bank. There are significant signs that investors are willing to invest selectively in Europe in good companies at very reasonable valuations. As the US public deficit becomes a problem for rates and currency, and the valuations of the US giants normalise, European companies will attract international investor interest.

The fund’s objective is to take positions in quality companies with good returns, and opportunistically in some cases to take advantage of market inefficiencies.

 

Download monthly factsheet [PDF]

 


Since May 2023, Spanish investors can access the Columbus strategy through the Spanish fund GVC Columbus European Equities FI. The 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 (feeder). The Luxembourg vehicle offers institutional and retail share classes denominated in euros and sterling.

Informe Columbus Septiembre 2020

Pareturn Columbus class I drop by 2.30 % in April and -2.62% since the beginning of the year.  Since its inception in June 2008, Columbus has achieved a return of 142.21%, far outperforming European equity markets.

The major event during the month was the takeover bid for Salcef, the Italian railway infrastructure company, in which we had 3% of the fund. The takeover represents a meager 20% premium from the controlling family that has partnered with Morgan Stanley Infrastructure Partners.

Over the next few months, the market expects the European Central Bank to start lowering rates, possibly in June, joining the interest rate cuts that have taken place in Switzerland and Sweden. The Bank of England is also expected to join the cuts, either in June or August. Corporate earnings have been positive on average, beating estimates. Both the expected rate cuts and corporate earnings are supporting European stock markets.

The stability of the euro and the revaluation of some large European companies that have a global presence and are undervalued are a good sign. We believe that there are significant signs that investors are willing to invest selectively in Europe in good companies at very reasonable valuations. To the extent that the U.S. public deficit poses a problem for interest rates and the dollar, and the valuations of the U.S. giants normalize, European companies will attract international investor interest.

As for the Columbus portfolio, during the month of April many stocks stand out for good performance in a market environment that was not so positive during the month. In the portfolio there are many stocks with good expectations that had a positive month, such as Salcef (+14%), Siemens Energy (+13%), Teleperformance (+10%), Fresenius (+10%). Getlink (+8%), Prysmian (+7%). On the negative side, April saw corrections in some stocks such as Befesa (-20%), Trainline (-13%) and YouGov (-11%).

We currently continue to hold significant positions (almost 25% of the fund) in the financial and insurance sector, where we are considering a gradual reduction: Unicaja, Hiscox, Scor, Ageas, Mapfre, EFG International. The global background where rates are higher than expected, capital has to be remunerated, which is favourable for the sector as it maintains an exceptional dividend yield (6%-8%). Lately there has been important news with Sabadell’s takeover bid, which favours our position in Unicaja. Consolidation is also foreseeable in insurance, where Generali has announced purchases in Europe.

In 2024, the fund has continued to be affected by two very specific positions that have had a notable impact and in which there have recently been signs of recovery: Grifols and Teleperformance.

We end with a comment on Grifols and Teleperformance, the two stocks that have suffered a huge correction. Columbus initiated positions in these stocks in the third quarter of 2023 after a significant fall in both cases. In Grifols, the company has refinanced 1 billion euros and obtained approval to sell an investment for 1.6 billion euros, both of which significantly change the financial profile of the company. In Teleperformance, the company posted good results and the management team has reiterated that for the time being, the company will be able to continue to grow its business soon.

 

Download monthly factsheet [PDF]

 


Since May 2023, Spanish investors can access the Columbus strategy through the Spanish fund GVC Columbus European Equities FI. The 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 (feeder). The Luxembourg vehicle offers institutional and retail share classes denominated in euros and sterling.

Pareturn Columbus class I returned 3.41% in March and -0.4% since the beginning of the year. Since its inception in June 2008, Columbus has returned 142.21%, far outperforming European equity markets.

It is a good time to reflect and explain the fund’s philosophy well. At Columbus we think that there is an investment opportunity in good medium-sized European companies that in many cases are leaders in their segment, are growing and offer attractive valuations, this is the largest group represented in our portfolio, such as Interpump, Buzzi, Prysmian, Befesa, Trainline, Bodycote or Unicaja. In the portfolio there are also some investments in which we expect a change in trend to positive, normally companies with restructuring or changes in management. This area encompasses the negative impact of Grifols, which has been notable, although diversification into other good companies has moderated the impact.

The fund’s philosophy is not to take excessive risk and diversify, avoiding poorly managed companies or companies with uncontrollable risks. The result in the quarter has been affected by two stocks that have had a negative impact, Grifols (-46% in the quarter), Teleperformance (-32%). We maintain the position in Grifols and it is recovering (+15% in 1 month), paradoxically it was bought with the expectation of changes in its balance sheet that, for now, have proven insufficient but that are still developing and we hope that they will recover, at least, a good part of their value.

On the positive side we highlight two blocks:

  1. Financial sector and insurance: due to persistent inflation and lower rate falls, the financial sector has performed well, in this case we have maintained relevant positions in securities that have seemed to us to remain very undervalue, have good expectations and a very solid dividend, examples of this are Unicaja (+29% in the first quarter of 2024), Mapfre (+21%), Scor (+21%) and Hiscox (+18%). We will reduce positions in some of these securities as the year progresses due to somewhat tighter valuations.
  2. Industrial and consumer: in this area we have had good results in companies such as Buzzi (+32%), Prysmian (+18%), Siemens Energy (+42%), Bodycote (+17%) and Trainline (+15%).

This is an important moment for Columbus. In the last 3 months we have thoroughly reviewed our positions, we have met with more than 100 companies and started some changes that we trust will have a solid return for our co-investors with contained volatility. The investment opportunity in good European companies is still there and we trust in a good return in the medium-long term.

 

Download monthly factsheet [PDF]

 


From May 2023, Spanish investors can access the Columbus strategy through the Spanish GVC Columbus European Equities FI fund. The 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.

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.

 

Download monthly factsheet [PDF]

 


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.

Columbus class I is up 4.5% in December, 9.0% in 2023 and 37.4% in the last 5 years. This was a good end of the year for European midcaps (MSCI Mid Europe: +8% in Q4), and in general for equity markets (Stoxx 600: +6% in Q4), but on the big context for small/midcaps, it was just a bounce after a weak 2022 (MSCI Midcaps: -21%).

In 2023 the small/midcap asset class continued to underperform the US “big 7” stocks, but it was good to see that the year-end rally in bond markets was followed by a good recovery in small/midcaps. We believe there is light at the end of the tunnel for European midcaps, and we also detect that the investment community is starting to pay attention to the space. Recent WSJ article is a good example (“Why Now May Be the Time To Invest in Midcap Stocks” Jan.2024)

The recent bond rally changes everything. Such a material change in trend is very relevant for 2 reasons: 1) Business and families can now finance cheaper than months ago, and it’s not just the cost, the fear of higher rates is a deterrent to take business decisions. Prospects of a more stable rate environment will ease fears and facilitate refinancing. 2) The rates level is the key factor for asset pricing and explains large monetary flows. Short-term monetary funds reached an all-time high in 2023, investors moved quickly into long-term rates in Q4 2023 and partly into midcaps. The alternative of fixed income is less appealing, and we believe there is no other asset class more interesting that high yields in quality smallcap equities. European midcaps continue to offer very interesting valuation levels and relatively good prospects, even if macro prospects continue to be uncertain.

We continue to see deep value in many high-quality companies in Europe which have solid growing cash flow prospects. The opportunity to invest in quality growth companies in Europe is still there, no matter if the macro situation can remain subdued for some time or if inflation does not return to the 2% target for some time.

There is excessive value concentration on the “Big 7” stocks, usually a driver of low returns in the long-term. An open economy requires a large group of companies that respond to economic needs and a good selection of midcaps tends to have better revaluation in the long term than the market average. Market consensus expects the economy to slow down in 2024 and begin a period of rate cuts that may be favorable for bond and equity valuations. The risk of a macro adjustment remains present. In this environment, we are convinced that Columbus’ portfolio is relatively well positioned.

Regarding Columbus portfolio, during the month of December, the return of some stocks stands out. The best performing stocks in December coincide with some companies where we recently increased our stakes such as Mobico (+27%), Prysmian (+17%), YouGov (14%) or Trainline (+13%). If we look at the full year 2023 the best performing stocks included Elecnor, Buzzi, Computacenter, Salcef, EFG International and Auto Trader.

On the negative side, during December financials continued to suffer from lower rates prospects (Unicaja: -13%, SCOR: -9%, Mapfre: -4%). Nevertheless, we retain exposure (c.17% of NAV) to several low-risk financials as current rates will continue to support earnings, value remains very supportive, and we see good earnings momentum particularly in insurance (we own SCOR, Ageas and Hiscox). Stocks that detracted performance in full year 2023 (partly recently recovering) include: Duerr, Mobico.

Over the past 2 months we have been very busy visiting more than 50 companies and made several changes in the portfolio. Recent additions to our portfolio include Kinepolis, an unappreciated growth and transformation story in cinemas, Befesa, a turnaround story in metal recycling, and Fresenius, another deep value turnaround story in pharma. Year 2024 appears to be favorable, despite the first trading days have been complex. The macro-outlook in our view is likely to set the tone, while rates could be supportive. At some point we expect a rerating for quality European midcaps, and we want to be ready to capture its long-term potential.

 

Download monthly factsheet [PDF]

 


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 Equties FI fund (subordinate). The Luxembourg vehicle offers institutional and retail share classes denominated in euros and sterling.

We are delighted to announce that Bosco Ojeda has joined Columbus. Bosco brings a wealth of experience having worked for over 25 years at UBS, where he held the position of Head of European Small and Midcap Research.

Pareturn Columbus class I is up 8.30% in November, 4.24% in 2023 and 24.5% in the last 5 years. This was a great month for European midcaps (MSCI Mid Europe: +6.4%) and in general for equity markets (Stoxx 600: +6.4%), although it’s just a small bounce after a weak October. The bounce was largely driven by a rally in bonds which experienced one of the best months for the past 40 years. Time will tell if inflation is set to return to central banks goals, but today inflation is no longer the concern it was months ago. Companies, families, and governments can now refinance 80bp lower than at the peak in October and there is a strong feeling that the rates risk is now limited. Money market funds are so heavily overweighted that the inflation change is a massive event. For European midcaps this is a very relevant theme, we see deep value in many high-quality companies in Europe which have solid growing cash flow prospects. The opportunity to invest in quality growth companies in Europe is still there, no matter if the macro situation can remain subdued for some time or if inflation does not return to the 2% target for some time.

 

The “big 7” (Apple, Amazon, Google, Meta, Microsoft, Nvidia and Tesla) underperformed midcaps this month. There is excessive equity concentration on those stocks, usually a driver of low returns in the long-term. An open economy requires a large group of companies that respond to economic needs and a good selection of small/midcaps tends to have better upside in the long term than the market average. Market consensus expects the economy to slow down in 2024 and begin a period of rate cuts that may be favourable for bond and equity valuations. The risk of a macro adjustment remains present, but rates relief is taking away a big risk of stagnation. In this environment, we are convinced that the Columbus’ portfolio is well positioned.

Regarding the Columbus portfolio, during the month of November, the return of some of the stocks we hold stand out. The 2 best performing stocks this month coincide with companies where we increased our stakes in 2023, including Grifols (+22%) and Elecnor (+16%). In both cases there was a clear catalyst behind the strong performance (asset disposals). A reminder that stocks can be cheap for long, but a good catalyst can revert how the market looks at some companies.
Other stocks that enjoyed a strong performance include Fraport, Prysmian, Neoen and Reply. These are stocks which were penalized despite a solid operating performance, there are quite a few of those in our portfolio that should be heavily rerated. On the negative side, during November a few financials have suffered from lower rates prospects (Unicaja: -6%, Mapfre: -2%, SCOR: -2%). We maintain a moderate exposure to low-risk financials as current rates will continue to support earnings for a while and value remains very supportive.

Over the past 4 weeks we have been very busy visiting more than 40 companies. This is a great time of the year to meet with management teams ahead of 2024. Most companies have good visibility on the budgets for next year and for Columbus is a fantastic opportunity to rebalance the portfolio. We anticipate relevant changes in Columbus over the coming days with fresh new ideas and changes in weightings. November performance can be the tip of the iceberg of a potential rerating for quality European midcaps and we want to be ready to capture its long-term potential.

 

Download monthly factsheet [PDF]

 


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 Equties FI fund (subordinate). The Luxembourg vehicle offers institutional and retail share classes denominated in euros and sterling.