NESTOR Europe - Quarterly Report 4/2022

Weak year 2022 - good start 2023

Energy crisis largely disappears into thin air

With a decline of -26.4% (V share class), the NESTOR Europa fund recorded one of its weakest years to date. Sectors that had provided the fund with considerable tailwind in recent years (performance 2021 +36.1%) came under particular pressure. Now that some of the negative factors have largely disappeared, especially the energy crisis, the first few days of January saw a good start to the new stock market year. Of course, we have again used the market turmoil for promising new investments, as we expect a further significant recovery.

New Wave Group - A new star in the stock market sky
Few experts would have expected the Swedish New Wave Group to become the stock market star of 2022. After all, consumer stocks, especially sporting goods manufacturers, suffered from the effects of high inflation and problems within the industry. In complete contrast to the situation in the industry, the Swedes managed to increase sales and profits strongly. Hardly anyone had expected this, not even us. However, in recent years the NESTOR Europa Fund has always been the fund with the highest international weighting in the New Wave Group. The reason for our confidence was the strong momentum of the "Craft" brand, which we had noticed in time. As the stock shows no signs of overvaluation despite the bull market, it remains the second largest core investment in the portfolio at present.

Teleperformance - buy on bad news
The outsourcing specialist Teleperformance has regularly been one of our favourite candidates in recent years. However, the sporting valuation held us back from an engagement. After we had only seen the rear lights for a long time and the stock kept climbing to new heights, the fuss about the alleged non-compliance with labour rights in Colombia now brought us an extremely favourable entry opportunity. As the company boasts that it is one of the "25 World's Best Workplaces", we expect that the concerns of the trade unions in Colombia can be allayed and that a sustainable improvement in working conditions can be achieved. Teleperformance is currently the largest position in the NESTOR Europe fund.

New acquisitions in the pets sector
Pets have been part of man's friendship for thousands of years. However, never before has so much been spent on pets as in the modern world. Reason enough to look at the topic from an investor's point of view. With the French Virbac (veterinary medicine, feed and food supplements) and the Swedish Swedencare (premium feed), we have now included two promising candidates in the fund. Among other things, Swedencare uses an ingredient made from natural seaweed that is harvested sustainably at specially selected sites in the fresh, cold waters of the North Atlantic off the Scandinavian coast. The share of the pet food manufacturer experienced a brilliant upswing in recent years, but then fell into a bottomless pit in the course of the general market correction. We acquired an initial position at the current level. And Virbac also suffered a lot in recent weeks, so we managed to get in at a good price.

Outlook: Glimmer of hope on the horizon? - YES!
"A glimmer of hope on the horizon?" we asked in the third quarter report, arguing that negative factors were easing. In particular, we counted a declining inflation rate due to falling energy and logistics costs. This assessment has since been adopted by the market, which has recently gone into recovery mode. The NESTOR Europa fund started the new stock market year with an increase in value of +7.34% (as of 16.01.2023). Although some sectors such as the construction sector are still likely to suffer from the rise in interest rates, we expect the markets to continue their significant recovery in the first quarter. Our favourites are, among others, the consumer sector and the IT sector.

Dirk Stöwer, Kontor Stöwer Asset Management GmbH