Investment Insights: Q3 Review and Outlook
As we reflect on the third quarter, our fund gained 5.2% gross of fees, with our net asset value (NAV) reaching 17.02. This brings our year-to-date NAV return to 13.5%, and our inception-to-date return to 70.2%, or 10.2% compounded annually. We’re extremely optimistic about our portfolio’s prospects and believe we’ll reach our compound return aspirations over time.
Market Volatility and Opportunities
The third quarter saw new highs for most major indexes, but not without some turbulence. The yen carry trade unwound, causing panic in the markets, while the Fed’s dovish tone and the Japanese central bank’s rate hike sparked concerns. Meanwhile, companies relying on ultra-low interest rates to create value are likely to face challenges in the long term. The Treasury’s growing debt and interest payments will also weigh on the economy.
Portfolio Highlights
We had a decent quarter with several notable developments within our portfolio. Two takeover offers contributed 97 basis points to our performance. Unieuro, the Italian electronics retailer, received an offer from Fnac Darty, while Everi, the slot machine manufacturer, was to be merged with IGT’s gaming and digital divisions. We also saw positive developments from Ocean Wilson, Dalata Hotel Group, and Syensqo, which initiated share buyback programs.
Top Contributors and Detractors
Our top contributors included Ginebra San Miguel, Ocean Wilson Holdings, Ibstock, Unieuro, and Kri-Kri. These companies reported strong performance, with Ginebra San Miguel’s gin and spirits business driving growth. Ocean Wilson’s port and tugboat operations in Brazil also performed well, while Ibstock’s brick and concrete product manufacturing saw a rebound.
On the other hand, our top detractors were Danieli & C Off Savers, Verallia, Var Energi, an undisclosed new position, and Pax Technology. These companies faced challenges, including destocking, declining sales, and increased competition.
Outlook and Strategy
We remain committed to our value investing approach, focusing on companies with strong fundamentals and growth potential. We’re excited about the medium-term prospects for our current portfolio and believe that our disciplined strategy will continue to deliver returns for our investors.
Important Reminders
We’d like to remind our investors that our fund is available on various platforms, including Euroclear, Clearstream, AJ Bell, Interactive Brokers, and SwissQuote. We’re also registered for distribution in the UK, Spain, and Luxembourg, and can be part of an ISA or pension.
Thank you for your ongoing support. We’re confident that our value-oriented approach will continue to deliver strong returns over the long term.
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