Performance Update Q1 2019

SKAGEN Global

Four US companies enter the portfolio as global equities perform strongly. SKAGEN Global A climbed 12.6% over the quarter, underperforming the MSCI All Country World Index which rose 14.1%.

Figures as at 31 March 2019 in EUR, net of fees and annualised for periods greater than one year
* Inception date: 07/08/1997

** Before 01/01/2010 benchmark was MSCI World Index

• DSV was the top contributor with the Danish freight company continuing its impressive execution and announcing a deal to buy Swiss competitor Panalpina which was welcomed by investors. Accenture was the next best performer, boosted by solid quarterly results as the US-based IT consultancy continues to capitalise on global digitisation trends.
• Following strong performance in 2018, Nissan Chemical was the weakest performer despite the Japanese company announcing relatively benign quarterly results. Hiscox was the next largest detractor as the UK insurer delivered results in line with expectations following a second consecutive year of catastrophe losses.
• Four new US holdings joined the fund with the addition of McDonalds in March – the fast food chain generates high return on capital and has attractive EM exposure – following investments in Edwards Lifesciences, Abbott Laboratories and Nike earlier in the quarter.
• Six companies left the fund with the sale of Dollar General, Waters and 3M in March on the back of strong performance and following the disposal of Sony, Chubb and CMS Energy earlier in the quarter.

Quarterly Report: Read the SKAGEN Global Q1 2019 Report here

SKAGEN Kon-Tiki

Chinese holdings’ strength drives relative outperformance as emerging markets deliver solid gains. SKAGEN Kon-Tiki A rose 13.2% in the quarter, outperforming the MSCI Emerging Markets Index which added 11.9%.

Figures as at 31 March 2019 in EUR, net of fees and annualised for periods greater than one year
* Inception date: 05/04/2002

** MSCI EM Index (net total return) did not exist at the inception of the fund and consequently the benchmark index prior to 1/1/2004 was the MSCI World AC Index. This is not reflected in the table above which shows the MSCI EM Index since the fund’s inception 

• Ping An was the largest contributor as the Chinese financial services group announced solid full year results and a well-received share buyback programme. Compatriot Wuliangye Yibin was the next strongest performer with the alcoholic beverage producer’s share price up 80% in 2019, buoyed by a strong domestic equity market.
• Mahindra & Mahindra was the largest detractor as the Indian car producer suffered from weak demand and currency weakness, followed by Ghana Commercial Bank which was also impacted by FX headwinds.
• Three companies entered the portfolio with the (re)introduction of Shangri-La (the Hong Kong-listed  hotel group remains a high quality franchise despite its discounted valuation) and PZ Cussons (the UK-listed soap manufacturer has exposure to attractive African markets), in addition to African TV operator Multichoice Group, which spun out of long-term holding Naspers.
• We exited from three Chinese holdings following strong share price performance with the sale of Wuliangye and Hangzhou Robam in March following the disposal of Great Wall Motor earlier in the quarter.
• The portfolio remains attractively valued, with its 49 holdings trading on a weighted-average P/E of 8.3x 2020 earnings and trailing P/B of 1.0x, representing discounts in excess of 25% to the EM index.

Quarterly Report: Read the SKAGEN Kon-Tiki Q1 2019 Report here

SKAGEN Focus

North American holdings drive relative gains as fund delivers strongest ever absolute quarterly return. SKAGEN Focus A increased 14.2% over the quarter, outperforming the MSCI All Country World Index which added 14.1%.

Figures as at 31 March 2019 in EUR, net of fees and annualised for periods greater than one year
* Inception date: 26/05/2015

• US poultry producer Pilgrim’s Pride was the top performer, boosted by expectations of higher prices and China’s willingness to consider US chicken imports. Canadian Ivanhoe Mines was the next best contributor, buoyed by positive pre-feasibility and economic assessments of its Kamoa-Kakula copper exploration area.
• Canfor Pulp Products was the weakest performer despite the absence of any negative news from the Canadian forestry company. Nova Ljubljanska was the next largest detractor with the Slovenian lender continuing to trade at a substantial discount to NAV despite reporting solid annual results with above average return on equity.
• Two companies entered the fund; Hitachi, an ignored Japanese conglomerate value opportunity, and West Fraser Timber, a Canadian lumber and wood product producer trading at a highly attractive valuation.
• We exited from South African Gold Fields as a rising gold price helped propel the South African miner towards our price target.

Quarterly Report: Read the SKAGEN Focus Q1 2019 Report here

SKAGEN Insight    

Strong company results drive absolute and relative gains; portfolio remains significantly undervalued. SKAGEN Insight A climbed 19.2% during the quarter, outperforming the MSCI World Index which rose 14.4%.

Figures as at 31 March 2019 in EUR, net of fees and annualised for periods greater than one year
* Inception date: 21/08/2017

• Diebold Nixdorf was the largest contributor as the US ATM provider maintained its strong recovery. Teikoku Sen-I was the next best performer with the Japanese disaster prevention company coming under increasing shareholder pressure to address its capital allocation strategy.
• Thyssenkrupp was the largest detractor despite delivering results in line with expectations; we remain positive on the German engineering group and expect activists to play a positive role in reshaping the company’s restructuring. Newell Brands was the next weakest performer following weak short-term guidance from the US homewares company.
• The portfolio remains significantly undervalued, with many holdings weighed down by negative investor sentiment, rather than deteriorating fundamentals. Underlying trends continue to move in the right direction as activists increasingly become the catalyst for positive change.

Quarterly Report: Read the SKAGEN Insight Q1 2019 Report here

SKAGEN m2

Solid company results drive strong portfolio gains as fund records highest ever NAV. SKAGEN m2 A climbed 14.1% during the quarter, underperforming its benchmark index which rose 17.4%.

Figures as at 31 March 2019  in EUR, net of fees and annualised for periods greater than one year
* Inception date: 31/10/2012

• Hembla was the strongest performer as the Swedish rental apartment operator confirmed its low operational risk and solid growth outlook. Kojama was the next largest contributor with the Finnish residential property company delivering strong results and positive guidance.
• Shangri-La Asia was the weakest performer despite fading fears over the hotel operator’s exposure to slowing Chinese growth, the Hong Kong real estate market and rising interest rates. Melia Hotels International was the second largest detractor as investors focused on the Spanish company’s weak first quarter guidance rather than its positive longer-term outlook.
• Two Japanese companies entered the portfolio; Keihanshin Build operates commercial facilities in Osaka which provides attractively priced exposure to the growing market for data centres, while JR Kyushu provides real estate and railway transportation services at a compelling valuation.

Quarterly Report: Read the SKAGEN m2 Q1 2019 Report here

SKAGEN Tellus

Euro depreciation and credit spread tightening drive solid absolute and relative gains. SKAGEN Tellus A added 4.1% in the quarter, outperforming the JPM Broad GBI Unhedged index which climbed 3.6%.

Figures as at 31 March 2019 in EUR, net of fees and annualised for periods greater than one year
* Inception date 26/05/201529/09/2006

** Before 01/01/2013 benchmark was Barclay's Capital Global Treasury Index 3-5 years

• Mexico was the largest contributor as domestic currency strength and lower interest rates lead to solid bond price appreciation. The fund’s new Croatian bond holding also performed strongly, driven by a fall in peripheral European credit spreads and an upgrade from S&P in late March.
• In addition to re-entering Croatia during the quarter, where we anticipate improving government finances will drive a further reduction in credit spreads, we invested in a short-dated Swedish government bond as we expect the krona to appreciate.

Quarterly Report: Read the SKAGEN Tellus Q1 2019 Report here

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All contribution figures are based on NOK returns at the fund level.

Historical returns are no guarantee for future returns. Future returns will depend, inter alia, on market developments, the fund manager’s skill, the fund’s risk profile and subscription and management fees. The return may become negative as a result of negative price developments.
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