Monthly Report October 2021

Stock market Mostly better

Performance Underperformance

Investments Slightly increased cash position

Outlook Higher

Markets

China has risen faster than the West had imagined. For all the justified criticism of this one-party regime, it has lifted hundreds of millions of people out of poverty. That is phenomenal. At the same time, the country is and remains a communist dictatorship. It was always assumed that communism did not work, even before the collapse of the Eastern bloc. You only had to look over the wall for that. Now we find that there is a communist system, and it works. So the West has to think seriously about how to deal with it without adapting. There is an impression that we are resting on our prosperity and high morals. They forget what made the West so successful. We should promote the advantages of our system - free trade, free speech

  • and work hard instead of constantly trying to convince the Chinese and other nations of our values. When Western politicians visit the Chinese, however, they need to speak out clearly about patent infringements or currency manipulation. The West has tangible interests, and these must be defended. If we only want to cooperate with states that are in line with our fundamental values, this is not likely to go well for the West. With the much- maligned Donald Trump, the way to talk to the Chinese could be learned.

Performance

In a friendly market environment, the Net Asset Value of Formulafirst Ltd. Slid marginally by 0.12% in October. The MSCI Europe increased by 4.54%. The resulting underperformance of Formulafirst Ltd. compared to the MSCI Europe is 4.66 percentage points for the month of October 2021. Since the beginning of 2021, an underperformance of 15.41 percentage points has resulted.

Investments

The margin of Dürr AG's Medtech business should be able to achieve an EBIT margin of 9% in 2024. Orders are starting to rise again in this area. Following the acquisition of Hekuma, further acquisitions will be made in the Medtech area. Dürr intends to strengthen its position above all in the USA. To date, sales of approximately EUR 50 million have been generated in the Medtech area. The initial target is sales of EUR 100 to EUR 150 million. In order to reach the top of this sector, Dürr wants to be able to achieve sales of EUR 400 to EUR 500 million in the long term. This would put the company on a par with its major Canadian competitor. Only at such a sales level would the Medtech business probably be spun off into a separate division. The double-digit organic sales growth in each segment and region of the Adhesives business of Henkel AG & Co. KGAA was driven by the recovery of the markets and the base effect. This division achieved organic sales growth of 20.2% in H1 2021, fueled by a strong recovery in industrial demand. Compared to H1 2019, organic sales increased by more than 7%. "Automotive & Metals" delivered the strongest growth due to an exceptional performance in the automotive business. "Electronics & Industrials" also grew double-digityear-on-year and significantly compared to H1 2019, benefiting from strong customer demand, especially from the Electronics business.

Outlook

The Chinese central bank usually tries to keep money supply growth in line with nominal GDP growth. It fears that higher money creation will lead to unwelcome inflation. However, with interest rates and money velocity trending downward, money demand is growing faster than nominal GDP. In view of the difficult situation in the important real estate market, we expect both the Chinese central bank and the state to loosen their policies sharply, with the corresponding favorable effects on the world stock markets.

Performance as of October 31, 2021

Net Asset

October

Since

Value

2021

2021

3 years

inception

CHF 33.20

-0.12%

3.75%

14.76%

5.02% p.a.

Share price development as of October 31, 2021 (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

Formulafirst (CHF) MSCI Europe Index (EUR) SO Index (EUR)

Breakdown by sectors

Materials

30.5%

Healthcare

25.0%

Industrials

12.9%

Consumer discretionaries

8.8%

IT

8.2%

Consumer staples

4.1%

FX

1.5%

Cash

9.0%

Country Breakdown

Germany 51.8%

Switzerland 48.2%

The largest positions

Wacker Chemie AG

9.6%

Swatch Group AG

8.8%

Forbo Holding AG

8.3%

SAP SE

8.2%

SGS SA

8.2%

Fuchs Petrolub SE

7.6%

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 33.24), at the previous year end (CHF 32.00) respectively 3 years ago (CHF 28.93). 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)

31.10.2021

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

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:

395,769

Market capitalization:

CHF 13 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

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Disclaimer

Formulafirst Ltd. published this content on 01 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 November 2021 16:56:02 UTC.