FORMULAFIRST LIMITED Monthly Report September 2022
Stock markets Weaker
Performance Underperformance
Investments Slightly increased cash position
Outlook Higher
Markets
American environmental scientist Roger Pielke Jr. believes that if there is such a thing as an iron law in climate policy, it is that economic growth always wins when policies aimed at economic growth are pitted against policies aimed at reducing emissions. At the beginning of the climate debate, there was great enthusiasm for introducing measures to increase energy costs. Before taking office, the U.S. Secretary of Energy under Obama, Steven Chu, believed that addressing climate change required raising the price of gasoline in the United States to about $10 per gallon. In 2012, he distanced himself from his view before the Senate, saying that as Secretary of Energy, he represented the U.S. government. The latter would rather see the price of gasoline fall than rise. A clear indication that growth won out over emissions reduction. A similar situation has been seen in the U.S. in recent times. After the U.S. gasoline price rose to over five dollars a gallon nationwide, the Biden administration reversed its stance on the energy issue by coordinating the largest release of global oil reserves in history to keep prices from rising further. In almost textbook fashion, the power of the iron law in climate policy is now unfolding in Germany. The Germans already have to pay the highest electricity prices in the world. Now that the massive increase in the price of gas and oil has been added to this, along with the acute threat to the country's energy supply, it is clear even to Greens that the economy has priority.
Performance
In a weak market environment, Formulafirst Ltd.'s September 2022 Net Asset Value decreased by 8.67% compared to the previous month. The MSCI Europe lost 6.38%. The resulting underperformance of Formulafirst Ltd. compared to the MSCI Europe is 2.29 percentage points for the month of September 2022. Since the beginning of 2022, an underperformance of 6.26 percentage points has resulted.
Investments
Ems-ChemieHold. achieved a good result for Q2 in a difficult environment. Apart from successful new business with innovative specialties, price increases also played a role. Higher raw material costs were consistently passed on. Margins were protected, among other things through efficiency optimization and accelerated new business with high-margin innovations. The outlook for 2022 remains good as a lot of new business is in prospect and China will perform better in H2. Holcim Ltd CEO sees no slowdown in business globally. No cancellations of projects, at most postponements due to lack of material. Order books are full everywhere. H2 will be very good according to the CEO. In 2023, the government infrastructure programs will be added, which have not yet been included in the order books. The acquisitions in the roofing and insulation business generated sales of CHF
3.5 billion. The margin has doubled in the 18 months since the acquisition. The EBIT margin could increase from today's 19% to over 20%. There are still many economies of scale to be leveraged by Holcim eliminating bottlenecks, among other things. Organic growth in these sectors is high. Holcim now occupies the 3rd or 4th position globally in these extremely large markets. As the Solutions & Products sector still has a lot of growth potential, the 30% Group sales share will be reached before 2025 and will probably exceed this mark.
Outlook
The increase in the U.S. Employment Cost Index by approx. 5% worries investors. However, assuming a long-term average increase in U.S. productivity of 1.5% p.a., there is still an inflationary contribution of 3.5%, i.e. 1.5% above the Fed's target of 2%. The remaining 1.5% should be easily eliminated by the central bank. In contrast to the 1970s, there is currently no increase in the velocity of money in circulation and the U.S. dollar is getting stronger in contrast to the decay at that time after the collapse of the Bretton Woods system. Therefore, a stronger than expected decline in U.S. inflation is to be expected in 2023 with the corresponding positive effects on the stock markets.
Performance as of September 30, 2022
Net Asset | September | Since | ||
Value | 2022 | 2022 | 3 years | inception |
CHF 25.17 | -8.67% | -25.58% | -11.56% | 3.35% p.a. |
Share price development as of September 30, 2022 (indexed)
180
160
140
120
100
90
80
70
60
50
40
35
Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Jan 19 Jan 20 Jan 21 Jan 22
Formulafirst (CHF) MSCI Europe Index (EUR) SO Index (EUR)
Breakdown by sectors
Materials | 26.5% | |||||||||
Consumer discretionaries | 20.5% | |||||||||
Healthcare | 14.7% | |||||||||
Industrials | 8.9% | |||||||||
IT | 7.1% | |||||||||
Consumer staples | 5.4% | |||||||||
FX | 0.4% | 16.5% | ||||||||
Cash | ||||||||||
Country Breakdown
Germany | 33.6% | ||
Switzerland | 66.4% | ||
The largest positions
Holcim Ltd. | 11.0% | ||||||
Swatch Group AG | 11.0% | ||||||
SGS SA | 8.9% | ||||||
SAP SE | 7.1% | ||||||
Forbo Holding AG | 7.0% | ||||||
Wacker Chemie AG | 6.1% | ||||||
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 restriction 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
Investment idea
Experience 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).
Owner-managed companies and those that are controlled by owner-oriented groups of investors are generally distinguished by their consistent strategy of long-term and sustainable growth. Since owner-managers have 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 generations, 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.
Investment strategy
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 investments are made in an anti-cyclical manner. The maximum sector weighting in the portfolio should not exceed 30%.
NAV and performance calculation
The Net Asset Value (NAV) of the Company is equal to the total assets less total liabilities of the Company (determined on the basis of International Financial Reporting Standards, consistently applied). The NAV per share is calculated by dividing the NAV by the amount of outstanding shares of the Company on the calculation day of the NAV. The monthly, year-to-date as well as the 3 year performance are calculated by dividing the actual NAV per share by the NAV per share a month ago (CHF 27.56), at the previous year end (CHF 33.82) respectively 3 years ago (CHF 28.46). The performance since inception (18 December 2002) reflects the annualized yield since 18 December 2002 till today, using a start NAV of CHF 13.-.
Smart Owners consistently outperform the market (indexed)
30.9.2022
700
600
500
400
300
200
100
80
70
60
50 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2017 2018 2019 2020 2021 2022
Smart Owners Index (EUR) MSCI Europe Index (EUR)
Company details | |
Company: | Formulafirst Ltd., British Virgin Islands |
Board of Directors: | Derek P. Baudains, Paul Broxup, |
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: | 274,730 |
Market capitalization: | CHF 7.0 mn |
Listing: | Swiss Exchange SIX |
Fees: | Management fee of 1.5% p.a., |
Performance fee 20% | |
current hurdle at CHF 34.24 | |
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-6300 Zug | |
Investor relations: | Dynamics Group Ltd. |
Alexandre Müller | |
Tel.: +41 43 268 32 32 | |
Internet: | www.formulafirst.vg |
E-mail: | info@formulafirst.vg |
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Formulafirst Ltd. published this content on 03 October 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 October 2022 15:52:54 UTC.
