Markets continued to rally in May, with investors encouraged by the gradual easing of virus-related restrictions across the world. Towards the end of the month, we started to see a marked factor rotation within the market with value/cyclicality starting to outperform growth/quality/price momentum. This move will have been painful for those funds/Trusts that have performed well year-to-date, and we fall into that category and so have had a tough few weeks. Nonetheless, we managed to outperform the market during May.

Our key positions that outperformed during May were AMS, Zur Rose and Scout24. AMS continues to perform well following strong quarterly results released in April. Zur Rose has been seen as a beneficiary of the Covid-19 crisis and of recently proposed regulatory change in the Germany pharmacy market. Scout24 is performing well due to the perception that the German property market is gradually returning to normal.

Our biggest detractors during the month included Telecom Italia, Grifols and STMicroelectronics. Telecom Italia announced disappointing quarterly results during the month, Grifols has suffered from the rotation away from growth/quality and STMicroelectronics has simply suffered from some profit taking after a strong run.

During the month, we initiated positions in Kion, Nexi, Enel and JDE Peet’s. Kion is a Germany industrial truck business focused on automated factories. Nexi is an Italian payments company exposed to attractive structural growth. Enel is an Italian utility company that has a large renewable energy business and JDE Peet’s is a Dutch listed coffee company that IPO’d during May. Linde, SGS and Allianz were sold to make way for these new positions.

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.


Cyclicality: businesses or stocks whose income, value, or earnings fluctuate widely according to variations in the economy or the cycle of the seasons