OK ECP VALUE MANAGEMENT February 2019
Entrepreneurial Value Investing Agenda ▪ EuropeanCapital Partners o Investment team o Investment process ▪ Investment approach ▪ Outlook ▪ Market value vs fundamental value ▪ Not all earnings are created equally ▪ Portfolio ▪ Our offering ▪ Fund key facts ▪ Appendix o Investment cases ₋ Krones ₋ Cloetta 2
European Capital Partners Asset Management « made in Luxembourg » ▪ A Strong entrepreneurial DNA ▪ Total AUM : EUR 451.38mn o Founded in 2010 by Patrick Hansen and Knut Marketable Reinertz securities o Portfolio Management activity strengthened 26% in 2014 with the arrival of Léon Kirch ▪ Two complementary areas of expertise o Investment Management Services focusing on an Entrepreneurial Value investment Alternative approach (investment funds and segregated Investments mandates) 74% o Third Party Management Company Services under AIFMD license (CSSF regulated) ▪ ECP Flagship SICAV : EUR 66.94mn ▪ 9 FTE, 12 years avg. industry experience, 7 Mixed Assets Global nationalities 1% Equities 2% ▪ Investment team o 2 Portfolio Managers (avg. industry experience of 20 years) and 2 analysts o All Investment decisions taken from Luxembourg European 3 Equities 97% Source: ECP. Data as at 31/12/2018.
Investment team A team of seasoned investment professionals ▪ Léon Kirch o Partner & CIO, has dedicated 20 years of his career to Value Investing. He graduated with a Master of Sciences in Management from Solvay Brussels School and was the founding President of the Luxembourg CFA Society. Léon is one of the few value managers worldwide who have outperformed the MSCI Europe over a period of twelve years. He is known to clients foremost as the fund manager of the Nordea European Value Fund that he co-managed from 2002 to 2014. The arrival of Léon Kirch in 2014 at ECP’s capital and management board marks the beginning of a new entrepreneurial dynamic characterized by the launch of a portfolio management activity founded on the key concept of “Entrepreneurial Value Investing” and a strong wish to promote the merits of active management in relation to the growing success of passive investment solutions. ▪ Allan Saustrup Jensen o Allan Saustrup Jensen, born in Denmark in 1976, has 18 years of experience in asset management and is one of the portfolio managers of Léon Kirch´s Value strategies. The native Dane started with Nordea Bank in 1997 where he held various positions in product development, distribution, advisory and trading. In 2005, he moved to UBS in Luxembourg and served as a portfolio manager for multi asset mandates. Prior to joining European Capital Partners in 2015, he worked with Léon Kirch for four years at European Value Partners. Allan Jensen became a CFA charterholder in 2007 and a CAIA charterholder in 2009. ▪ Gajendra Rai o Gajendra Rai is an Analyst at European Capital Partners (ECP) since 2016. Gajendra started his career in 2003 in the Energy sector where he held different positions internationally. In 2014, he decided to give a new orientation to his career and pursued Master of Science in Banking and Finance at the Luxembourg School of Finance. He joined ECP in 2015 as an intern and, upon graduation, was retained as a full-time employee. His industrial background provides him an edge when analysing companies from those sectors. ▪ Mohamed Afifi o Mohamed Afifi is an Analyst at European Capital Partner since June 2017. Mohamed started his career in December 2011 as an associate Auditor for one of the big four PriceWaterhouseCoopers in Egypt. In 2013 he moved overseas to enrol in the FEMIP program at the European Investment Bank to afterwards take the routes of a Financial Controller. In June 2017 he joined European Capital Partners as an Investment Analyst after finishing his Master degree in Wealth Management in Luxembourg School of Finance. He also passed level II CFA exam. 4
Investment team Long-term commitment ▪ Long-term investing in marketable securities with a private equity mindset ▪ A strong alignment of interest ensured by the long-term commitment of shareholders and employees o Léon Kirch owns 50%+ 1 share o Léon Kirch is Board Member and acts as CIO o Serial entrepreneur, Patrick Hansen (*), is a committed shareholder and acts as Chairman of the Board o Shareholders have invested their own savings in ECP’s strategies (same conditions as other investors) ▪ Other Luxembourg entrepreneurs and institutions as fund’s seeders (references can be provided) 5
Investment team Advantages of our boutique ▪ Full alignment of interest with our investors ▪ Every investor is our partner ▪ Capacity limit of 1bn EUR ensures consistency and absence of style drift ▪ Full focus on Entrepreneurial Value Investing ▪ Asset Managers and not Asset Gatherers ▪ Boutique outfit enables long term investment horizon 6
Investment team Manager’s Long -Term Track Record 250 230 210 190 170 150 130 110 90 70 50 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 MSCI Europe Net TR Index MSCI Europe Value Net TR Index Fund ▪ Track-record from the Nordea European Value Fund co-managed MSCI Europe Turnover rate by Léon Kirch from Jan. 2002 to 7 July 2014. MSCI Europe Portfolio Value Min (P,S) / av. Net return ▪ Source: Bloomberg, net of fees performance from 31 December Net return Asset 2001 to 7 July 2014. Please note that past performance is no 2008 -45.88% -43.65% -46.10% 10.30% indication for future performance. The sub-fund referred to on this page is a constituent of Fund of a UCITS operated by a different 2009 42.40% 31.60% 34.51% 20.48% UCITS manager and is not part of the ECP Flagship SICAV. Whilst the sub-fund might have or have had similar characteristics to that 2010 22.82% 11.10% 4.85% 15.15% of an equivalent sub-fund within the ECP Flagship SICAV, it is to be 2011 -9.35% -8.08% -8.90% 33.89% noted that it may have been subject to a different fee structure and set of investment restrictions. ECP has reflected the data here for 2012 22.13% 17.29% 17.17% 13.04% information only which has been derived from a commonly used industry source being Bloomberg. ECP in no way intends that the 2013 14.23% 19.82% 22.22% 21.42% reflection of such information in this manner might in any way be 7 5 years 121.20% 88.86% 83.98% designed to impinge on any proprietorial rights that the UCITS Manager might have in respect of the data reflected here.
Investment team 3 words, 3 pillars, an original concept Entrepreneurial Value Investing “Think and act as an “Margin of safety” concept Patience will be rewarded entrepreneur” (B. Graham) ▪ 4-5 years investment ▪ The risk of an investment ▪ Earning Power : capacity horizon : investment case is tied to its fundamentals to generate discretionary needs time to mature not to its stock price free cash flow on an ▪ Active, high conviction average year → focus on ▪ Golden rule : Understand and concentrated amount of cash needed to companies’ business portfolio (± 40 individual maintain the business lines) ▪ Fundamentals of the ▪ Margin of safety : ▪ Flexibility: go where business are translated difference between stock into a Firm’s intrinsic opportunities are price and its intrinsic value value ▪ Low portfolio turnover ▪ Target: 40% discount to estimated intrinsic value 8
Investment process Our Investment strategy Idea Due Diligence Portfolio Portfolio Sell Discipline Generation & Valuation Construction Maintenance • Proprietary • ESG Analysis • High • Dialogue screenings Conviction with • Fundamental companies • Other analysis • Bottom-up sources • Review of • Earnings • Undervalued investment Power Value Quality thesis • Margin of safety +/-40% Independent Investment Risk Monitoring 9
Investment approach Idea generation Valuation ▪ Our screening is like a “fishing net” ▪ FCF yield pointing our attention to undervalued ▪ Price Earnings quality companies ▪ EV/EBIT o A Quality Company bought at a discount Profitability Growth is always better than a fairly valued ▪ ▪ Returns on Asset Utilization Quality Company incremental capital ▪ Capital Intensity invested ▪ Operating Margins o A Company with Improving Quality is ▪ FCF Generation always a better investment opportunity Quality than a stagnant Quality Company o Low Quality is not of interest even at a ▪ High Payout low valuation ▪ Low Debt ▪ Low recourse to ▪ Low cyclicality external financing Payout Safety 10
Investment approach With a particular focus on ESG principles ▪ ▪ : Signed in Dec. 2017 Integration in the Investment Process as a 1st step of the fundamental analysis ▪ Collaboration with ISS Ethix for ▪ o Proxy voting 2 main topics considered o ESG research Controversial Norm based o Portfolio monitoring weapons research ▪ ECP views ESG as a risk factor, not a Human Rights Mass destruction weapons performance driver on its own (nuclear, chemical, biological) Labour standards o Weak performance on ESG factors may Conventional weapons negatively impact the Earnings Power of a Environment (non-detectable fragments, blinding laser weapons, anti- company personnel mines, cluster munitions, incendiary weapons, depleted Anti-corruption uranium ammunition) ▪ ESG works as an additional layer of information for decision-making 11
Recommend
More recommend
