Initially, the managers write that rising oil prices caused the oil companies’ share prices to rise, thereby losing relative returns to the energy companies as you do not invest in oil or gas companies. The stocks that did the strongest during the month were Pro Medicus, Munters and Fortnox. In the negative balance were Argan, Eurogroup Laminations and Medpace, all of which were pulled down by the negative small company segment. Regarding the Australian company Pro Medicus, the managers write that they took home a large order from an American hospital chain, which caused the share price to rise sharply. Furthermore, the managers write that what affected the equity markets the most during the month were new high levels of market interest rates which are a consequence of the FED announcing further increases in the key interest rate to curb inflation. “However, we see that inflation is on the way down in almost all countries, proof that tough monetary policy from the central banks bites.
However, we hope that the central banks will be careful with new increases as the consumer is already having a tough time with their interest payments,” write the trustees. Regarding the portfolio activity, the holdings in El.En and Hexatronic were sold. In conclusion, the trustees write that the month’s decline in the fund means that they believe that the share portfolio is very undervalued. “Right now the small cap fund is valued at around 18x next year’s earnings and this with expected earnings growth of almost 17 percent.
In our eyes, it is attractive,” write the managers. The largest holdings in the fund’s portfolio at the end of the month were Asbury Automotive, Qualys and Modine with portfolio weights of 4.2, 4.2 and 4.1 percent respectively. Regarding the geographical distribution, the fund had the greatest exposure against the USA with 25.7 percent of allocated capital, followed by Sweden and England with weights of 24.7 and 11.3 percent, respectively.