Update: three weeks into the new fund

Three weeks have passed since Lannebo Europe Small Cap was launched. The portfolio is fully invested and consists of 30 promising companies, mainly within industrials and financials.
Carsten och Ulrik mini

Carsten Dehn and Ulrik Ellesgaard, fund managers, Lannebo Europe Small Cap

The Europe Small Cap fund was launched 17 October. The return for October since inception was -1,7% which is slightly lower than the market in the similar period. The European Small cap equity market has been soft due to a concern among investors regarding the strength of the overall growth possibilities and future QE from the Central Bank.

The portfolio is fully invested and consists of 30 companies. The highest sector weights are within industrials and financials. On a company level the biggest positions are Arrow Global, Stabilus and Dürr.

Arrow Global is a UK based debt-purchasing and servicing business with a top three market position in the UK and Portugal. The company has a strong track record in terms of top line growth and return due to a very disciplined executions strategy. We believe that the EPS growth will be above 20% per year in the coming years with a Return on Equity of more than 27%. The valuation is very attractive given the high returns and earnings growth.

Stabilus is a German company with a global market leading position within gas springs and dampers. The products are mainly sold to the automotive and industrial industry. The customer base is diversified and the company benefits from strong pricing power and economies of scale combined with structurally growing demand. We believe that earnings will grow significantly going forward and that the market undervalues the high quality of the business.

Dürr is a German company with a global market leading position within paint shop engineering to the automotive industry. Dürr operates mainly in oligopolistic niche markets with limited competition. As the most dominant player, the company is well positioned to benefit from of a sustained catch-up demand in several markets. In the longer term Duerr will also benefit from the expected transformation of the automotive industry towards electrical cars.

The best performer in the portfolio the first three weeks was Alimak. The company has a global presence in hoists, elevators, platforms and spare parts, with a dominant position in the industrial rack -and-pinion based market. The strong performance has been driven by a strong order intake related to the construction industry and due to an acquisition which in total will lead to strong earnings growth in the coming years.

The worst performer in the portfolio was NCC Group. The UK IT security services specialist issued a trading statement saying that the organic growth in the business was very strong. However it was also stated from management that the company has lost some contracts related to the latest acquisitions. This is clearly negative news but we believe that the underlying business is strong and the share price reaction is overdone.

Written by: Ulrik Ellesgaard

Related articles

Öhman new main owner in Lannebo Fonder

When Öhman becomes the new main owner of Lannebo Fonder, the result will be the Nordic region's largest independent fund manager and an even more powerful offering to customers. "The companies are a perfect fit...

Read more

Strong start for Lannebo Europe Green Transition

September was another negative month for the stock market. But Lannebo Europe Green Transition has nevertheless got off to a good start. "Falling prices always mean opportunities," say the managers....

Read more

Lannebo launches fund focusing on Europe’s green transition

September sees the launch of the Lannebo Europe Green Transition Article 9. An UCITS equity fund that will invest in small and mid caps that contribute to Europe's green transition....

Read more

New director of institutional sales in Denmark: Philip Garde

Philip Garde is leading the efforts to reach out to institutional investors in the Danish market....

Read more

Lannebo Recruits new head of sustainability from Nordea

Lannebo recruits Katarina Hammar as new Head of Sustainability and Corporate Governance. She joins from Nordea Asset Management, where she was Head of Active Ownership. ...

Read more

Lannebo Sustainable Nordic Equities fund awarded by Lipper

Lannebo Norden Hållbar was awarded as the best Nordic Equities strategy by Refinitiv Lipper. "We've had the courage to go our own way", fund manager Charlotta Faxén says....

Read more

Small caps for the long term

Investments in small caps has been at the heart of Lannebo's management since the company was founded two decades ago. Today the successful strategy is headed by Per Trygg. A fund manager who has his...

Read more

Lannebo Räntefond Kort awarded “Best swedish fixed income fund”

Focus on risk and stability makes Lannebo Räntefond Kort the best swedish bond fund in 2021, according to Fondmarknaden. ...

Read more

Citywire: “Nordic apetite for bite-sized businesses”

Per Trygg manager of the small cap equity fund Lannebo Småbolag interviewed in Citywire. ...

Read more

Lannebo recruits Jessica Malmfors as the new CEO

Lannebos board of directors appoints Jessica Malmfors as new CEO. Jessica Malmfors most recently served as CEO of Nordea Investment Management. ...

Read more