informe marzo

The sudden fall in equity markets in late February continued over the first two weeks of March driven by the unprecedented global nature of the pandemic and the relatively high valuations of stocks at the beginning of the year. At the low point in the month the European markets had fallen more than 35% in just 4 weeks. The speed of the decline was remarkable compared to previous bear markets with even the ‘Great Financial Crisis’ of 2008 taking almost a year to push markets down a similar amount. However, Europe was by no means exceptional in the recent fall, and as more and more countries put their economies on hold, we saw reactions from investors across all regions and asset classes.

Recently, ex-Fed Chairman Ben Bernanke argued that the virus impact will be more like a “major snowstorm or a natural disaster than …depression”. If he is right, then we should expect a relatively rapid rebound once the outbreak is controlled. Looking back at recent disasters (such as the Japan 2011 earthquake, Haiti hurricane in 2010 and the 2005 Asian tsunami) we find that sharp initial losses were typically made up after a few quarters. The pattern of growth around the 2003 SARS outbreak was similar – a big initial slump then a very strong recovery.

report march

Our baseline scenario, given the extent of both fiscal and monetary containment measures in many countries, is therefore one of rapid and deep recession, followed by an equally rapid recovery. The first forecasts by the IMF point to very significant declines of around 7.5% of GDP across Europe in 2020, concentrated in the first half of the year, followed by a strong recovery of 4.5% in 2021. Translated into profits for 2020, this supposes falls from 20% to 40% according to the sectors and companies, followed by increases in 2021 of a similar order to leave them, over the two years, slightly below the level seen at the end of 2019. While the current focus is rightly on each company’s ability to withstand this period of lockdown, once the pandemic recedes, the market will begin to focus on the expected results of 2021.

As for the Columbus portfolio, we entered the crisis with somewhat higher cash levels than normal (around 13% of NAV). We have spent several months with no exposure to some of the more cyclical sectors (oil, raw materials, autos), including very little exposure to banks and other financials. We continue to be positioned in companies where we see better returns for lower risk, especially in technology, consumption and services. We have taken advantage of the fall to add to previous holdings and to take positions in securities in the infrastructure sector which have seen dramatic falls, but where the longer-term potential remains undiminished. We believe that the recovery will not be uniform across all sectors and that it will continue to focus on quality companies with healthy balance sheets and controlled levels of debt. To the end of March the Columbus Fund fell slightly less than the MSCI Mid Cap and IBEX indices, and slightly more than the STOXX600 as we would expect given the mid-cap focus. The fund performed well during the bounce in markets through the latter half of the month and we are confident that we are well placed for when the true recovery comes.

We thank your trust and wish the best to you and your families during these uncertain times.


Since June 14, 2018 both domestic and foreign investors have been able to access the Columbus strategy via the master-feeder structure between the Columbus 75 Sicav in Spain (feeder) and the Luxembourg registered Pareturn GVC Gaesco Columbus European Midcap Equity Fund (master). The Luxembourg vehicle offers both institutional and retail share classes. 

imagen ficha junio

During the month of June, Inversion Columbus rose +2.95% compared to +4.28%, +2.16% and +4.08% for the STOXX 600, IBEX 35 and MSCI Mid Cap indices, respectively.

Since the beginning of the year, profitability is 13.52%. Over a three and seven year period, performance is 20.19% and 87.59%, respectively, and since the beginning of Columbus, in July 2008, it is 99.33%, far surpassing the profitability of the aforementioned European equity indices. The volatility of the portfolio remains at 11.7%, much lower than the average of recent years and similar to the volatility of STOXX 600.

During June, the world stock exchanges partially reversed the strong declines of the previous month. The fear of the trade war’s consequences has given way to investors focussing on the measures that central banks will adopt. Futures are currently pricing in the fact that the Federal Reserve will lower rates up to 3 times in the next months with the first drop due next September. The ECB has also announced measures to support the banking sector. We continue to believe that although there is an economic slowdown, we do not expect a recession.

We continue to be positioned sectorially in consumer and service companies and with reduced positions in the banking, automotive, retail, natural resource and oil sectors that have greater exposure to the economic cycle and that have therefore been the most affected by the decreases of the last month.

The portfolio currently has very attractive average valuations, with PERs and EV / Ebitdas of one digit that nevertheless have double-digit sales growth and Ebitdas forecasts for the coming years. We continue to have confidence in our portfolio, which is diversified into companies with high returns on capital and cash generation as well as strong sales and EBITDA forecasts for the next few years at discount prices.

 

Country Distribution

With regards to the portfolio, Anima’s performance (+21%) has stood out. Last month, we already pointed out that we consider the valuation of the Italian asset manager to be very attractive given the decreases of previous months and because we expect corporate movements in the sector. AKKA technologies’ performance (+15.4% for the month, 48% for the year) is also worth highlighting. The French engineering firm announced strong revenue growth of 26%, propelled by AKKA North America’s revenue growth of 34%. We have taken advantage of these increases to reduce our position in Bodycote and sell our positions in Forfarmers, K + S and FLSmitdth.

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Thank you for your trust.

 


Since June 14, the Master-Feeder structure between Inversion Columbus 75 Sicav (feeder) and the compartment in Luxembourg, Pareturn GVC Gaesco Columbus European Midcap Equity Fund (Master), has been operational.

This structure allows domestic and foreign investors to access the Columbus strategy from a vehicle established in Luxembourg, with two types of shares according to investment volume. The creation of this structure does not bring any kind of fiscal contingency for current investors. The sub-fund is available in the AllFunds, Inversis and MFEX fund platforms.