VALENTUM
VALUE & MOMENTUM
Madrid, 3 November, 2016.
In October VALENTUM was down -1.3% (Eurostoxx +1.8%, IBEX +4.1%,
%, MSCI Europe -0.9%,
S&P500 -1.9%,
%, Russell 2000 -4.8%). October has not been a great month for
fo VALENTUM.
Many European indices have risen thanks to the Banking sector. Our portfolio has suffered the
fall of some significant stocks such as Regus, DIA and Tower Int. However, the two stocks that
weight the most in our portfolio, Dominion and Alantra (formerly N+1) have had a good
performance.
The Portfolio
VALENTUM’s
’s exposure at the end of the month is 80.4%. We have increased slightly our
exposure in three of our big stocks, Dominion, Alantra and Regus. The first two have been
opportunistic increases, strengthening slightly our positions, while in Regus we have increased
the weight up to 8% with the recent fall of the stock. We believe that the punishment is being
too severe, we do not expect a worsening of the bus
business
iness but we expect a very positive FX
impact on results. We have also increased our position in Capgemini through short PUTs, as we
believe that the market has over reacted, its business continues to be healthy, it generates a
strong cash flow and has no debt.
The Details
DIA: The 3Q results release brought good and not so good news. Good news are that organic
growth continues to be positive in Iberia and accelerates in Emerging countries, especially
Brazil. Margins remain solid in Iberia and continue to iimprove in Emerging. The “not so good”
came from the debt position. DIA stated that it will not achieve the €200mn debt reduction
target. It is true that this can be partially justified by the advanced payments to the Spanish
Tax Office (recently announced by the Government) and a slightly higher CAPEX. Our opinion
on the situation of the company is that 1) the business is back to growth,, maintaining margins
even with the dilutive effect of acquisitions. This is key to remain in the stock. 2) Integration of
acquisitions is being more difficult than expected, especially in terms of recovering the
working capital investment which is being slow. However, Q4 should be cash positive in NWC.
The market did not like the factoring to improve the WC position, although it should be
temporary and underlying WC should im
improve in the next quarters. 3) Management has,
again, was not clever in setting targets that were too optimistic to start with. One year ago
they were too early in their target to achieve positive LFLs and now with the debt reduction. 4)
We maintain our position.
sition. Why? Because we believe that the negative effects of the
integration will be solved in the next months and we should see a period of deleveraging and
cash generation with sustained organic growth. There is more than 13% short interest in the
stock and management has answered all the short thesis that have been: negative organic
growth for long (already in positive), margins will sink (still stable), franchise model is a fraud
(number of franchisees continues to grow and after talking to some of the unhappy
VALENTUM, FI - Managed by Gesiuris Asset Management
Follow us on twitter: https://twitter.com/ValentumFI
Paseo de la Castellana, 82, 1ºB · 28046 Madrid - Rambla de Catalunya, 38 · 9ª/1ª Planta · 08007 Barcelona
VALENTUM
VALUE & MOMENTUM
franchisees and DIA’s franchise Director we believe there is no such fraud) and finally, there is
too much debt (which is true, although not a real concern as it continues to generate cash and
2017 should be the year were acquisitions are already integrated). Conclusion: We have to be
patient as momentum is weak, but with an 8% of FCF yield and high discount vs. peers, we
believe there is value.
Capgemini: consultancy,, technology and outsourcing French company. We like
li the recurrence
of this low capex business that generates high cash flows with very low debt (0.6x
(0.
NFD/EBITDA). The company is re
reducing costs with higher
her proportion of human resources in
India and developing new clients and countries. Thee most important news has been the iGate
acquisition in US with nearly no clients in ccommon (cross selling). The stock has been
b
punishing
for reducing slightly the organic growth (2% vs. 3%), but keeping the cash flow generation
objectives. The reasons for lower growth are: weak situat
situation in the energy sector in the US and
an extraordinary impact in Brazil. Good results in UK (20% sales) despite of Brexit. We think
that with 8% FCF yield is an interest opportunity. We initiate our position in July selling puts
below €80/sh. Some of them were not made because of higher prices than the strike. If we
discount the premium to the Price we have created our position at €75/sh. instead
i
of €80/sh.
We don’tt use to talk a lot about this, but not following stock prices and create a position by
selling puts gives us alpha and reduces volatility.
Best regards,
VALENTUM, FI.
For further information, please contact with VALENTUM’s management team
team, Luis de Blas and
Jesús Domínguez, +34 91 250 02 46.
VALENTUM, FI
www.valentum.es
@ValentumFI
VALENTUM, FI - Managed by Gesiuris Asset Management
Follow us on twitter: https://twitter.com/ValentumFI
Paseo de la Castellana, 82, 1ºB · 28046 Madrid - Rambla de Catalunya, 38 · 9ª/1ª Planta · 08007 Barcelona
VALENTUM
VALUE & MOMENTUM
NAV performance since inception until 31/10/16
Fund Information
35.0%
MSCI Europe (EUR)
30.0%
VALENTUM
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
Performance
2014
2015
2016
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
YTD
4.1% 11.2%
-7.5% -2.2%
0.2%
2.6%
6.7%
-1.9%
1.2%
-0.1%
2.3%
1.1%
3.1%
0.4%
-2.2%
-4.9%
-2.5%
2.6%
7.6%
1.9%
-6.1%
1.9%
0.4%
-1.9%
-1.3%
-1.7%
9.1%
-1.3%
3.3%
3.5%
-
1.7%
-2.3%
-
4.0%
23.8%
1.0%
*The comparison with the MSCI Europe Index in EUR is only in terms of comparison
Portfolio
DUFRY; 2.1%
TECNOCOM; 2.3%
ALMIRALL; 2.5%
DOMINION; 10.3%
ALANTRA; 9.4%
LVMH; 2.6%
EUROPAC; 3.1%
Investment
Policy
Global Equities
ISIN
ES0182769002
Bloomberg
Code
VALNTUM SM
EQUITY
AUM
20,432,977 €
Last Price
12.98 €
Basis
Daily
Currency
Euro
Dividends
Accumulation
Fees
Fixed Fee
1.35%
Success Fee
9%
Depositary
0.1%
Subscription Fee
None
Refund Fee
None
Minimum
Investment
None
REGUS; 8.3%
NORMA; 3.1%
DIA; 4.7%
SARAS; 3.3%
TOWER INTL; 4.5%
RENTA CORP.; 3.3%
CAPGEMINI; 3.7%
EDPR; 4.1%
SAETA YIELD; 4.2%
Investments by type of Instrume
Instrument
Legal Information
Management
Firm
Exposure/AUM
80.4%
VALENTUM, FI
Less than 2%; 6.8%
APERAM; 2.3%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Name
Managers
78.2%
Depositary
ry
21.2%
2.2%
TOTAL Equities
Cash Equities
Derivatives
Cash
Gesiuris Asset
Management,
SGIIC, SA
Luis de Blas /
Jesús
Domínguez
RBC Investor
Services
España S.A.
Auditor
Deloitte, S.L.
Legal Entity
Spanish Fund
(UCIT IV)
Supervisoryy
Entity
CNMV
Registry Number
4710
VALENTUM, FI - Managed by Gesiuris Asset Management
Follow us on twitter: https://twitter.com/ValentumFI
Paseo de la Castellana, 82, 1ºB · 28046 Madrid - Rambla de Catalunya, 38 · 9ª/1ª Planta · 08007 Barcelona
VALENTUM
VALUE & MOMENTUM
Disclaimer:
The information contained in this document reflects the opinions of the fund’s Asset Management Firm, GESIURIS ASSET MANAGEMENT
S.G.I.I.C., S.A. and in particular of VALENTUM’s managers at the date of the issue. Although the information used in the equity research is
considered reliable, its accuracy cannot be guaranteed and the resulting projections and valuations could not be met. This document is
provided for informational purposes and should not be considered as a financial advice or a recommendation to buy or sell any stock or
instrument. The stock positions shown are at the date of the fund’s latest NAV mentioned in the NAV chart and are subject to change without
prior notice. Past performance is no guarantee of future returns
returns. The price of investments may vary and the investor may not recover the
amount initially invested. Investors should be aware that the financial instrument and the stocks mentioned herein may not be suitable to
their specific investment targets. Therefore
Therefore, investors should make their own investment decisions. Before investing,
investing the investor should
know the risks of the product and the information contained in the latest semi
semi-annual report and the full and simplified prospectus (DFI)
(DFI
available in www.cnmv.es, www.gesiuris.com and www.valentum.es. This document does not detail all of the positions
positio in the portfolio of
VALENTUM,, FI and aims to inform of the most important issues of the portfolio, especially in relation to the events of the last month
month.
This document is not an advertising campaign for the subscription or acquisition of shares of open-end collective
ective investment schemes and
does not constitute an advertising or promotional activity. The recipient knows the applicable rules on collective investment and has shown
expressed interestt in receiving such information
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onic communications regarding VALENTUM, FI, please
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VALENTUM, FI - Managed by Gesiuris Asset Management
Follow us on twitter: https://twitter.com/ValentumFI
Paseo de la Castellana, 82, 1ºB · 28046 Madrid - Rambla de Catalunya, 38 · 9ª/1ª Planta · 08007 Barcelona