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NESTOR Europe - Quarterly Report 1/2021

Sweden rally continues

NESTOR Europe gains 14.46% in the first quarter

With an increase of +14.46% (V share class), the NESTOR Europa fund once again performed very well in Q1, while the benchmark MSCI Europe index gained +7.43%.

The performance of the V share class since launch on 01.07.2016 increased to +82.82% compared to +46.56% for the MSCI Europe. This gives the fund an annual return of +13.54%, which corresponds to an outperformance of +5.16% p.a..

In principle, phases of general confusion are a good environment for stock pickers. However, the fund's exceptionally good performance is also due to the fact that we have already steered the fund through the various crises of the past. An important lesson here was to set all sails in good time and not to remain in a state of fearful rigidity.

Fund provider Ökoworld AG with another price jump
At the 6th FONDSKONGRESS TRIER on 29 October 2020, we asked "Are the capital markets efficient?" and tried to show, on the basis of the performance of Ökoworld AG, that the enormous increase in the "assets under management" of this company has not yet been reflected in the company value, although this key figure can be ascertained on a daily basis. In the meantime, the share price has doubled and is thus more in line with an appropriate share price level. We therefore continue to assume that active and intelligent stock picking, compared to passive investing, has its raison d'être and leads to a clear excess return in the long term.

Danish building supplier H+H succeeds in balance sheet restructuring
Since construction suppliers have been one of the mainstays of the NESTOR Europe fund for years, we like to look at candidates from these sectors. At a conference in Copenhagen a few years ago, we came across H+H International, a manufacturer of aerated concrete (so-called "Ytong bricks") in need of restructuring. Several meetings with the management subsequently convinced us of a serious change in the competitive parameters in the industry, which had been characterised by a ruinous price war for years. Finally, after an initial investment, we also participated in a substantial capital increase and made the stock a core position in funds. In the meantime, H + H has become a real success story. Due to the comfortable balance sheet ratios and the high inflow of liquidity, the company was recently even able to start a share buyback programme. Even after the good performance of the last few months, the stock still seems to us to be extremely good value.

Swedish DIY chain Byggmax off to a good start
Although the Swedish stock market is in bullish mode after the pleasing success of the local Corona strategy, we still find lucrative special situations there. Like the DIY chain Byggmax, which is pursuing a discount strategy. After the expansion course of the last few years first had to be digested and the share went through a certain dry spell, the lights are now apparently on green again, as the company impressively demonstrated at a capital market day in Stockholm. We particularly like the success of the e-commerce activities and the recent move into Denmark. The price of Byggmax shares has already risen strongly, as it has for the two other new investments in Sweden, Semcon and Betsson.

The share of Swedish companies in the fund now amounts to 35.1%, and including Denmark and Norway we have a total Nordic share of 51.7%.

After a one-sided focus on certain segments of the market in recent years, other sectors are now coming into focus. We believe we can profit from this situation to a particular extent. Moreover, the turmoil caused by the Corona crisis continues to leave sectors that have not yet been able to recover strongly. We have already shortlisted candidates here.

We also see opportunities in companies that pay a far above-average dividend, such as the Swedish IT company Softronic or the Norwegian furniture retailer Kid ASA. As the activities of the Scandinavian governments with regard to the Corona situation seem more thoughtful to us than in core Europe, we will continue to give preference to this region.

Dirk Stöwer, Kontor Stöwer Asset Management GmbH