August saw another moderately positive month for global equities. The period was characterised by the continued outperformance of cyclical companies as investors tried to look beyond the short-term economic impact of Covid-19. We have tended to run an underweight exposure to cyclicality, and although this held us back during August, we still managed to marginally outperform the market in NAV terms.

Our key positions that outperformed during August were Telecom Italia, Embracer and Vestas. Telecom Italia finally seems to be seeing substantive progress in its attempt to merge its fibre business the other domestic player, OpenFibre. Embracer, the Swedish gaming company, reported very strong quarterly numbers during August highlighting a continued buoyant environment for gaming revenue growth driven by a number of successful product launches. Vestas is witnessing consistently strong demand-side conditions as global renewable capacity continues to grow.

Our biggest detractors during the month included Grifols, Delivery Hero and Zur Rose. Grifols is suffering from the combination of collection delays and potentially heightened future competitive pressure. Delivery Hero and Zur Rose simply lost ground after a very strong run over recent months.

We sold our positions in Rubis and Getlink during August; we did this to reallocate capital towards ideas where we see larger potential upside. Our most notable purchases were to increase our exposure to Telecom Italia, where we see a fibre merger as likely, Vivendi, which we see as undervalued ahead of a potential UMG IPO, and AMS, the Swiss semi-conductor company.

We are confident in our positioning and will continue to retain balance in our exposures by considering two types of business for investment; those where we see potential high and sustainable returns that are undervalued by the market and those companies where we can see a material improvement in medium term business prospects.



Cyclical: Companies that sell discretionary consumer items, such as cars, or industries highly sensitive to changes in the economy, such as miners. The prices of equities and bonds issued by cyclical companies tend to be strongly affected by ups and downs in the overall economy, when compared to non-cyclical companies.

Net Asset Value (NAV): The total value of a fund's assets less its liabilities.