Fondita European Micro Cap – a fantastic first 6 months

2017-11-01

We launched our seventh fund, Fondita European Micro Cap, in March this year. The launch of the fund was successful both in terms of performance and growth. Today the fund has a total of around 50 million euros under management and the net return during the first six months has been around 25 %.

The fund has benefitted from many factors. The underlying European economy has continued to show favorable development which benefits local and smaller family owned companies. More important, however, are the structural changes in society occurring at the moment. These changes, occurring for example within demographics, digitalization, and the environment, are long-term drivers for our portfolio companies. As an example we can name the fund’s largest investment, Austrian S&T, a company that develops different types of digital solutions for the manufacturing industry. The company is growing both organically as well as through acquisitions. The company recently acquired its main competitor in Germany broadening its product offering within cyber security solutions. S&T’s share price has doubled since the launch of the fund.

The electric motor manufacturer Aumann as well as Paragon, a company manufacturing batteries for electric vehicles, have contributed positively to the fund’s development during the past six months. The main drivers have been environmental trends and restrictions on carbon dioxide emissions to be imposed in many large cities in the future, paving the way for significant investments within electric vehicle technology for the world’s car manufacturers.

We see great opportunities for a majority of our investments given the increasing environmental awareness worldwide. Furthermore, we see good opportunities for different types of niche players to grow in the future. These niche companies often have specific competencies and technological know-how needed in the future and are companies that we like to invest in over the long-term. Examples of such companies are health care software companies Ecker & Ziegler and Coltene. The fact that we grow older and still want to live a healthy life drives growth in Dutch bicycle manufacturer Accell Group. The company is market leader in its markets for electric bicycles, a market that is growing by 20 % on a yearly basis.

The fund’s primary portfolio manager Kenneth Blomqvist along with deputy portfolio manager Tom Lehto continue to look for tomorrow's stars among Europe's smaller and sometimes forgotten niche players with good growth opportunities and proven business models. They look for companies with good profitability, strong cash flow and sound balance sheets. These companies are often and preferably family-owned.

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