During the month of April the Fund (I-class) was up 3.8% and the MSCI World Small-cap index was up 3.3%. The Fund (I-class) has booked outperformance versus the benchmark of 0.5% over the month, mostly driven by stock selection in the sector information technology. We are pleased with the month as the Fund (I-class) is now slightly outperforming the benchmark YTD by 0.3% after the costs. Performance of the MSCI World Small cap Value index was 3.0% versus 3.7% for the MSCI World Small cap Growth index. Given our stable value tilt we think the portfolio showed a solid performance in the month of April. At the current levels of valuation, we continue to consistently look for opportunities in quality companies with solid balance sheets in our global universe.

Three top contributing stocks during the month of March were First Solar (+16%), Teradyne (+23%) and Dialog Semiconductor (+27%). First Solar (+16%) benefited from positive broker reports and continued strong demand for solar panels driven by more companies, countries and states moving to 100% clean electricity standards. Teradyne’s share price rose 23% driven by strong momentum in semiconductor related stocks. Teradyne posted strong Q1 results in April despite a more cautious outlook of some customers. Dialog Semiconductor' stock was up 27% in April. The company announced on 25 April that it anticipated higher than expected profitability in Q1. Additionally the stock benefitted from a strong recovery in semi stocks globally.

Negative contributors in March were Sleep Number Corp (-26%), AA (-18%), and Pendragon (-15%). Sleep Number Corp (-26%) was the largest detractor to the performance in April. The expectations had moved up to (in hindsight) unrealistic levels in anticipation of the Q1 results. The Q1 results were solid in our view, but not strong enough to support a further rally in the stock. Sleep Number's stock corrected from the $48 level to the mid-thirties. We did take some profit before the results, but we used the correction to add to our position as we see a compelling risk/reward setup in the mid-thirties. AA’s share price was down 18% in the month. AA, the leading UK roadside assistance provider, reported FY results in line with expectations and reiterated its guidance. However, following last year’s introduction of the new strategy plan, the biggest question mark still is whether AA can successfully stabilize B2C membership. The company is spending significant additional amounts on digitalization, marketing and product innovation but it is yet too early to see tangible evidence that these investments are paying off. AA plans to organize an Innovation Day in May, during which it will elaborate on these new developments. At the beginning of the year, at higher share price levels, we have reduced our position in AA and wait for more visibility on improved cash flow generation. Later on in April, AA announced that the CFO will be leaving, which did not come as a total surprise to us. An internal candidate will assume the interim CFO role, while the company is starting a search. Pendragon’s stock price was down 15% in April after the company missed Q1 estimates. The company has a new management team in place and is currently undergoing a strategic review. There is a lot of potential in our view, but the risk profile is also above average. Due to this we have a very low portfolio weight in Pendragon. We will reconsider our position after a careful review of the new plan which we expect in June.

The Fund invests world-wide in smaller companies (small-caps). One attractive feature of small-caps is that they are generally monitored by a small number of analysts, which leaves plenty of opportunity to add value as active investors. When looking for new investment opportunities, screening is applied to reduce the investment universe to a manageable size of 500 companies. We screen for companies that are of above-average quality and that are attractively valued. Extensive fundamental analysis is done on both existing portfolio companies and new portfolio candidates. This includes analysis of the company’s public filings (like annual reports) and comprehensive dialogues with the management teams of companies that we invest in. For each stock we base our investment decision on an extensive investment case, which is supported by a proprietary financial model. ESG topics (Environmental, Social and Governance) are fully integrated in our investment process. The result is a well-diversified portfolio of 60-90 companies spread across sectors and regions. Many portfolio companies have leading positions in the niche markets in which they operate. The companies in the portfolio typically have robust balance sheets and high returns on capital employed, which indicates that these companies are structurally capable of increasing shareholder value via their operations. The portfolio has a more attractive price earnings ratio versus the benchmark.