Lettre d’information
Newsletter
September 2014
The following information regarding the performance and the evolution of the NAV are only for share C (share reserved for the fund’s seeders) and are no
guarantee of the future performances of share P, created in July 2013.
TIKEHAU InCA
Share P
MARKET OUTLOOK
We had begun the month of September with heavy exposure to risky assets at 90%, including 70% in equities. The S&P
500 set record after record; in September the Eurostoxx 50 approached its July highs; and the much-awaited third week
of September (the Fed announcement, the Scottish referendum, and ECB forward guidance) held no bad surprises in
store. And yet, after this important week we chose to switch back to a more cautious allocation by significantly reducing
the size of the equity portfolio and the duration of the corporate bond portfolio. We did so to lock in our gains and to
be able to reinvest aggressively in the event of a market correction, something we believe would be would be healthy,
particularly on the US market, which has not seen a significant drop in more than two years (since June 2012).
While we expect a possible (healthy) correction, we nonetheless remain constructive on the markets for risky assets. The
world is full of solid, attractively priced companies that throw off lots of cash to pay off their debt, invest, and
remunerate their shareholders. More than ever, discipline is key to analysing these securities – both bonds and equities –
as well as the levels at which we buy them. For, in this uncertain environment, the market has little stomach for bad
news, even less so when valuation multiples are high. While opportunities are out there, accommodating monetary
policies are inflating asset prices in several of the world’s regions, making indices more vulnerable and pushing yields to
all-time lows.
It is against this backdrop that we begin third-quarter reporting season, which, for the first time in four years, is likely to
see gains in European corporate earnings. Earnings forecasts are no longer being downgraded, and a shift in
management guidance was apparent in second-quarter comments. The euro’s decline should provide a boost to
exporting companies. However, these expected steps forward must not mask the need for structural reforms that
Europe currently lacks to get economic growth back on track.
October will also see the end of quantitative easing in the US and the presidential election in Brazil – two major events
for the markets. So cautious optimism is the watchword.
Bond portfolio: We slightly reduced the portfolio’s duration by raising its floating-rate portion, based on the assumption
that with 10-year European yields at about 1% (true, probably for a long time to come), they probably won’t fall much
further. So what would be the point of keeping a long duration? We also shrank the allocation of financial subordinate
bonds in anticipation of the many new issues in this segment. This asset class’s September decline will probably uncover
some investment some opportunities in the near term. We are keeping an eye out for them.
Equity portfolio: We scaled back our equity exposure significantly just before the FOMC meeting and the outcome of
the Scottish referendum (so, a little too early) by diluting the size of the holdings that are most exposed to market stress,
event-driven stocks like BNP Paribas, and quality stocks that have fared well since implementation, like Microsoft.
Boardwalk Pipeline, the portfolio’s largest holding, was cut from 8% to 5% of fund AuM, for example. We are holding
on to this position for the asymmetry in its upside potential in a market rally compared to its downside potential under a
bearish scenario. But we prefer to lower the weightings of these holdings for the moment, even if that means raising
them later in the event of a market correction. We continue to find value in some (but certainly not all!) defensive stocks
of deleveraged companies or companies generating heavy free cash flow, such as Vivendi, Alstom and Cisco.
Cash: We are holding on to a large store of cash. In the event of a market correction, this will allow us to seize
opportunities in both corporate bonds and equities. In the meantime, we prefer to play our views through options when
they are acceptably priced, so as to limit losses in the event of market stress.
Hedging: For our conviction-based portfolio, in which our selection and buying price discipline are our best protection,
we have chosen to neutralise some market risk with hedging instruments. In so doing, we sought to lower the cost of
these protections by choosing underlying assets that should take a bigger hit than the major indices in the event of a
market correction. We have therefore chosen to set up these hedges on indices exposed to rising US bond yields
(NASDAQ, Russell 2000 and MSCI Emerging Markets) and to stocks that are comparable to our event-driven
convictions but trading at very high valuations and at low levels of volatility.
In short we are confident that, in the current monetary policy environment in Europe, risky assets (corporate bonds and
equities) are the only sources of returns, but that discipline is more than ever essential when it comes to assessing the
buying prices of these securities. And if there should be a correction in the US, on certain emerging markets, or in
certain asset classes such as convertible bonds, it is worth holding onto a heavy store of cash to seize any opportunities
that might arise.
NET ASSET VALUE EVOLUTION
190
170
150
130
110
90
Managed by Tikehau IM
Jul-14
Jan-14
Apr-14
Jul-13
Oct-13
Jan-13
Apr-13
Jul-12
Oct-12
Jan-12
Apr-12
Jul-11
Oct-11
Jan-11
Apr-11
Jul-10
Oct-10
Jan-10
Apr-10
Jul-09
Oct-09
Jan-09
Apr-09
Tikehau InCA (Share C)
S C AL E
O F
P O T E N T I AL
R I S K
Recommanded investment
horizon : 5 years
1
2
3
4
F U N D ’ S
5
6
7
C H AR AC T E R I S T I C S
Fund’s inception: 08/19/2001
Tikehau IM’s delegation of management: 04/13/2011
Managers: Thomas Friedberger and Vincent Mercadier
Legal form: SICAV governed by French law AMF’s
classification: « Diversified » SICAV
Morningstar’s classification: Allocation EUR Flexible –
International
(Share C)
Currency’s reference: Euro
Distribution policy: Accumulation
Management company: Tikehau IM
Custodian: CACEIS Bank
Reference indicator (since 07/01/2013):
25% Eurostoxx 50 NR dividends reinvested + 25%
compounded EONIA + 25% BofA Merrill Lynch Euro High Yield
Constrained Index coupons reinvested + 25% indice BofA
Merrill Lynch Euro Corporate coupons reinvested.
Shares available: P – ISIN : FR0011530948
I – ISIN : FR0011765692
C – Reserved exclusively for seeders
K E Y
F I G U R E S
NAV as 09/30/2014: 550,97€ (Share P)
Net Asset Value as of 09/30/2014: 67M€
Volatility (12 months rolling): 8,7%
AD M I N I S T R AT I V E
F E AT U R E S
Management fees share P: 1,30% ATI max + 10% ATI of the
SICAV’s performance above its reference indicator
Management fees share I: 1,00% ATI max + 10% ATI of the
SICAV’s performance above its reference indicator
External fees : 0,30% ATI max (Shares P & I)
Subscription fees:
Share P: 3% ATI max
Share I: None
Valuation frequency: Daily
Subscription / Repurchase: Every day before 12p.m
NAV: unknown
Minimum of subscription Share P: 1 share
Minimum of subscription Share I: 1M€
Payment delivery: D+3
PERFORMANCES MONTHLY / ANNUAL (Share C)
P E R F O R M AN C E S
2009
2010
2011
2012
2013
2014
Jan
-1,2%
-0,9%
1,2%
3,9%
1,3%
-1,3%
Feb
-2,5%
-1,8%
2,0%
2,9%
-0,1%
4,8%
Mar
-2,1%
4,3%
-0,6%
0,7%
-0,2%
0,6%
Apr
9,1%
2,7%
2,0%
-2,2%
0,2%
1,9%
May
3,9%
-6,0%
0,8%
-3,8%
2,4%
1,3%
Jun
0,8%
0,1%
-2,5%
0,2%
-0,7%
-0,3%
Jul
2,5%
1,5%
2,4%
5,0%
1,8%
-1,0%
Aug
5,0%
-2,9%
-11,1%
1,8%
2,6%
1,8%
Sep
1,0%
3,8%
-4,3%
0,4%
3,2%
0,2%
Oct
-0,1%
1,1%
8,1%
-1,4%
1,2%
Nov
-3,7%
1,9%
-5,0%
2,0%
1,4%
Dec
3,7%
3,7%
1,8%
3,9%
1,2%
Year
16,8%
7,1%
-6,2%
14,0%
15,8%
8,3%
The information contained in this document is confidential and is for the exclusive use of the original listed recipient(s). The contents
of this document are for informational purposes only. All market prices, data and other information are not warranted as to
completeness or accuracy and are subject to change. Past performance is no indication or guarantee of future performance. Any
investment decision should be made solely upon, and after reviewing, the information contained in the Fund Prospectus.
( S H AR E
C )
1 month
+ 0,2%
3 months
+ 1,0%
6 months
+ 4,0%
12 months
+ 12.5%
Since (04/11/2011)
+ 30.1%
TIKEHAU INVESTMENT MANAGEMENT
32 rue Monceau – 75008 Paris
Tél. : +33 1 53 59 05 00 – Fax : +33 1 53 59 05 20
491 909 446 RCS Paris – AMF certification number: GP 07000006
Insurance broker registered under number: ORIAS 09 051 177
Lettre d’information
Cash & equiv
Credit
43%
3%
M AN AG E M E N T
Credit
Equity
35%
% AN
The investment strategy consists is managing,
on an active and discretionary basis, a
portfolio of equities (between -50% and 110%
of NAV), money-market instruments and
bonds (between 0% and 100% of NAV) in all
economic sectors and geographies (including
emerging markets).
R I S K I N D I C AT O R
& C R E D I T D AT A
% AN
BOARDWALK PIPELINES
Equity
5,2%
LINDE
Equity
3,1%
BERKSHIRE HATHAWAY
Equity
4,9%
WELLS FARGO
Equity
2,9%
Numbers of bonds : 20
CALL EURSTOXX
Derivatives
3,8%
NRG ENERGY
Equity
2,8%
Yield to Maturity : 6,6%
VIVENDI
Equity
3,5%
MICROSOFT
Equity
2,7%
Average rating : BB
ALSTOM
Equity
3,2%
ANHEUSER-BUSH INBEV
Equity
2,2%
United-States
United Kingdom
Spain
Belgium
Italy
Israel
Hong-Kong
Germany
France
Canada
Derivatives premium
Cash & equiv
D I R E C T I O N
Tikehau InCA is a diversified SICAV
investment fund governed by French law. It
aims to outperform a synthetic index over a
minimum recommended investment horizon of
5 years.
18%
24%
R I S K I N D I C AT O R
& E Q U I T Y D AT A
2%
1%
Telecom-Cable
Insurance Senior
Real Estate
Packaging
Consumer Cyclical
Insurance Sub
Chemicals
Basic Industry
Healthcare
Banks Sub
Services
Utilities-Energy
Financial Services
2%
1%
1%
1%
Numbers of shares : 26
Bonds
Bonds
Equities
Actions
4%
24%
1%
3%
36%
BREAKDOWN
BY SECTOR - EQUITY
FIRST TEN
POSITIONS
BREAKDOWN
BY COUNTRY
18%
Equity
Derivatives
premium
BREAKDOWN
BY SECTOR - CREDIT
36%
BREAKDOWN « EXPOSURE »
BY ASSET CLASS
BREAKDOWN « CASH »
BY ASSET CLASS
PORTFOLIO
2%
2%
2%
3%
4%
4%
4%
4%
6%
7%
11%
11%
Real Estate
2%
Financial Services
2%
Basic Industry
Banks
Capital Goods
7%
8%
Media
9%
Consumer Non-cyclical
9%
Chemicals
10%
Technology
10%
Diversified Financial
40%
4%
12%
Utilities-Energy
The information contained in this document is confidential and is for the exclusive use of the original listed recipient(s). The contents
of this document are for informational purposes only. All market prices, data and other information are not warranted as to
completeness or accuracy and are subject to change. Past performance is no indication or guarantee of future performance. Any
investment decision should be made solely upon, and after reviewing, the information contained in the Fund Prospectus.
27%
TIKEHAU INVESTMENT MANAGEMENT
32 rue Monceau – 75008 Paris
Tél. : +33 1 53 59 05 00 – Fax : +33 1 53 59 05 20
491 909 446 RCS Paris – AMF certification number: GP 07000006
Insurance broker registered under number: ORIAS 09 051 177