Monthly Report November 2011
Equity markets Down Performance Outperformance Investments Invested Outlook Upward MarketsThe current upheaval in the European markets for government bonds is part of the long-term trend, which constrains a forced restructuring of governments as economic entities. The 80-year-old experiment of adventurous Keynesian policy is coming to an end. Capital markets are forcing governments to achieve sound state finances, which is more painful than if conservative fiscal policy had been pursued on a voluntary basis. The long worldwide restructuring of public finances leads to the following hopes and concerns. The role of a government in economic processes should be as limited as possible. In particular, for the allocation of money, if there is a danger of politicians using the capital for their own goals rather than for the purposes of those who actually generate the capital. The main concern is the political and social reaction to measures that are being implemented. However, riots are futile. If Greek public sector unions could influence the Ministry of
Share price performance as of November 30, 2011Net Asset Value CHF 16.93 | November 2011 -0.29% | YTD -9.71% | 3 years 48.51% | Since inception 2.95% p.a. |
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Finance, they would only find a dry well. As soon as it is obvious that the
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treasury does not have sufficient funds, the allocation process will become very political. The decision on who shall bear painful austerity measures is not a joyous task. Two groups will face each other antagonistically, those who finance governments with taxes and those who profit from taxes and increased debt levels.
PerformanceIn a volatile environment, shares of Formulafirst Ltd. declined slightly by 0.29%, while the MSCI Europe lost 1.42%. The resulting outperformance of Formulafirst Ltd. against the MSCI Europe in November 2011 is 1.13%-points. Since the beginning of the year, the outperformance stands at 3.01%-points.
Formula rst (CHF) MSCI Europe Index (EUR) SO Index (EUR)
Breakdown by sectors Investments Axel Springer's course of business remains stable despite the ongoing turmoil in the financial markets. Over the coming 5-7 years, the share of the company's Digital Media sector should rise to 50% of the total revenue. The revenue from advertising in this segment should once again experience double-digit growth in 2012. Space to advertise on the homepage of www.bild.de is fully booked for the coming months. Fielmann has not experienced any impact from the economic slowdown. The corporation is steadily gaining additional market share. The hearing aid segment is developing stably at a growth rate of 50%. The gross profit margin will increase slowly but steadily. Revenues are expected to rise by 5-6% in2011, while profits should increase slightly more. Overall, Fuchs Petrolub remains optimistic that demand in all business segments should remain at an elevated level, despite clients becoming more hesitant in placing orders.
Materials Consumer discretionaries Industrials
Consumer staples Healthcare Cash
Country Breakdown3.6%
14.3%
22.1%
21.4%
19.3%
19.3%
In the US, the company is experiencing strong demand across all sectors. In 4.Q.2011, margins should improve companywide, as price increases will gradually have an impact. Henkel's purchased commodities should stabilize in price or even decrease slightly in 4.Q.2011. This will impact profits slightly in 4.Q and to a bigger extend in 1.Q.2012. Henkel's strong organic revenue growth will normalize in the range of 5%. The corporation reduced its GDP forecast for 2012 from 3% to 1.5-2% and therefore will have to introduce further austerity measures to achieve its targeted EBIT margin of 14%.
OutlookMarkets are losing patience and are demanding effective solutions in regard to the European debt crisis. Half-hearted bailouts and countless EU summits
Deutschland 62.1%
Schweiz 37.9% Oesterreich
The largest positionsRational
Beiersdorf
8.7%
10.2%
are not sufficient to calm markets and provide the necessary
confidence.
The EU has to choose between two evils: The introduction of
Eurobonds or an increase of the money supply. However, it is
obvious that markets will have to continue to put pressure so
as to change the minds of the muddled politicians. We remain
constructive and expect the final agreement to be reached in
the coming weeks.
Fresenius SE Straumann Sika Vossloh
6.6%
6.5%
6.2%
7.7%
This information is not an offer to purchase or subscribe to shares in Formulafirst and may not be circulated in any jurisdictions where it violates any applicable laws or regulations, including and without restric- tion in the United States of America. While the information given is considered reliable, Formulafirst, respectively 2trade group ltd. don't guarantee that it is complete or accurate. Opinions and estimates may be amended without notice. Past performance is not an indication of future performance.
Formulafirst - investing in "smart owners" Formulafirst: the concept Smart Owners consistently outperform the market (indexed) Investment ideaExperience shows that owners generally invest more successfully than em- ployees. The Investment company Formulafirst focuses on Smart Owners as they are known. The investment universe consists of owner-managed companies in Central Europe (D-A-CH).
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Owner-managed companies and those that are controlled by owner-ori- ented groups of investors are generally distinguished by their consistent strategy of long-term and sustainable growth. Since owner-managers have
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a substantial share of their wealth and, in most cases, of their working time invested in the company, their strategic business orientation includes goals such as maintaining the company's independence, a smooth transfer to the next generation as well as safeguarding and growing the company's assets. The long-term perspective, in some cases spanning several genera- tions, is a major reason why these companies are more focused on their long-term strategic positioning rather than on the short-term maximization of returns.
Investment criteria
For owner-managed companies to be included in the investment
universe of Formulafirst, the following conditions must be
met: a) headquarters in Central Europe (Switzerland, Austria
and Germany), b) listed on an regular stock exchange, c)
minimum market capitalization of EUR 100 million, d) managed
by owner-managers holding at least 15% but no more than 75%
of voting rights. The universe of owner-managed companies
from which the best stocks are picked by Formulafirst for
investment includes the 50 such companies with the highest
market capitalization.
The companies selected form the basis for Formulafirst's
investments.
Made up of the 50 owner-managed companies the investment
universe is screened by a thorough fundamental analysis in a
primarily "bottom-up" approach and the most promising stocks
are identified.
Formulafirst invests in equities convertible instruments,
options (manag- ing existing positions), futures (to hedge
currency and market risks) and shares of holding companies
and funds. Investment exposure is 100% of company assets. The
investment horizon is long-term and the selection of
portfolio positions is limited to a reasonable number. The
size of individual investments may not exceed 10% of the
portfolio when purchased (cost). The investment style is
primarily based on the "value" approach and invest- ments are
made in an anti-cyclical manner. The maximum sector weighting
in the portfolio should not exceed 30%.
Smart Owners Index (EUR) MSCI Europe Index (EUR)
Company details Company: Formulafirst Ltd., British Virgin Islands Board of Directors: Derek P. Baudains, Kay Reddy, Markus Gresch Investment manager: 2trade group ltd., Zug Management team: Sammy Matter, Martin Treffer, Daniel Biedermann Auditors: PricewaterhouseCoopers, Zürich Corporate structure: Public limited company Inception: 18.12.02 Type of stock: bearer shares Shares outstanding: 2,130,835 Market capitalization: CHF 37 mn Listing: Swiss Exchange SIX Fees: Management fee of 1.5% p.a., Performance fee 20% above 3% p.a., current hurdle at CHF 24.49 Security number: 146 29 83 Reuters: FFI.S Bloomberg: FFI SW Equity, FFI SW Equity NAV Net asset value: Website daily, Wednesday/Saturday in FuW (Finanz und Wirtschaft) Address: 2trade group ltd.Baarerstrasse 2, CH-6301 Zug
Investor relations: Dynamics Group Ltd.
Alexandre Müller
Tel.: +41 43 268 32 32
Internet: www.formulafirst.ch
E-mail: info@formulafirst.ch
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Monats-News November 2011 Englisch |