January was another decent month for performance.

Our performance in January was driven by the outperformance of a few key positions. First, Cellnex, the Spanish telco-tower business, performed well. The tower industry is fast consolidating and having successfully completed a number of deals in 2019, Cellnex look well placed to be a key participant in further deals which will likely occur in 2020. Novo Nordisk, the Danish specialist pharma business, also started the year well. We continue to believe that Novo’s exposure to diabetes care, obesity and potentially Alzheimer’s, leave it well placed. RWE, the German utility company, was another strong contributor. RWE is going through a significant shift from coal-fired electricity production to wind-powered electricity production. We believe that this business transformation will be positive.

During the month, we initiated new positions in Telecom Italia and Ingenico. Telecom Italia, the Italian telco incumbent, is an inexpensive equity, deeply disliked by the market on account of its high levels of debt and exposure to a tough competitive environment in Italy. We see a business with turnaround potential and are backing the relatively new CEO Luigi Gubitosi to cut costs, increase free cash flow generation and to pay down debt with the proceeds. We have been working on the payments space for a few months now and decided to invest in the French company Ingenico to get access to this attractive area of the market. The sector is fast consolidating; Ingenico looks inexpensive and well positioned to participate in consolidation, either as an acquirer of assets or as the subject of interest from other industry participants.

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 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.