The Fund ended the month up more than 3% and performed in line with its benchmark, the MSCI World Value Total Return Net Index. Year-to-date the Fund is still up sharply but not enough to keep up with the benchmark.

The market continued to rally over the month as sentiment remains very bullish with investors. The reasons mentioned during the previous months continue to boost the market, in particular the announcement by the Fed (about a slower path of potential interest rate hikes. Also the Q1 reporting season has been helpful.

Strong performers this month were Arcadis, Capital One Financial Corp and WPP. Engineering firm Arcadis reported solid Q1 results, with revenues and margins increasing. Until last year, investors were concerned about the balance sheet, but these fears eased as the debt situation has improved. Also US consumer finance company Capital One reported better than expected results, driven by lower operating expenses due to improved efficiencies. Advertising agent WPP rose sharply despite result being in-line with expectation. The unchanged full-year guidance was enough to push the share price higher.

Weaker performers in April were Antero Resources and Ferrexpo. There was no specific news with regard to E&P company Antero, but the natural gas price in the US continues to be under pressure. Although the company has hedged part of its output at higher prices and has significant exposure to Natural Gas Liquids, the weaker gas price had an impact on the share price. The valuation has become even more attractive after the share price drop. Ferrexpo owns iron-ore mines in the Ukraine, and the shares had performed very well until this month. Prices for its high-quality iron-ore pellets surged after mine closures in Brazil. This month, the share price dropped after an external investigation started to examine whether a charitable foundation set up primarily to philanthropic activities was used to launder money and evade taxes. The company itself has also started an in-depth review. For the moment, we stick to our position.

The investment objective of the Fund is to invest in a portfolio of listed companies worldwide that trade at a discount to their intrinsic value. When investing, the focus will be on strong valuation discipline, cash generation and rational capital allocation. We conservatively estimate the fundamental value of a business and buy with a sufficient discount to create a margin of safety for potential mistakes. The Fund combines a business owner’s mindset with a rational investment process. Historically, value has outperformed growth over the long-term, but value has underperformed growth for an unprecedented period by now. As we believe in reversion to the mean, value investing could offer an attractive investment opportunity going forward.

We believe overall global stock market valuations are elevated, although Emerging and European markets still offers some pockets of attractively valued opportunities. The North American market is quite expensive. A company may appear attractive based on its price to earnings ratio or other headline multiples, but if margins and/or revenues are high, this only gives you limited information about the future returns of an investment. In our investment process, we spent a large portion of our time understanding where profitability should be on an over the cycle basis, as this is what determines the cash flows we will receive as a long-term shareholder.

Our focus is on finding companies that can be bought at a discount to our estimate of intrinsic value. We base our estimate on the Earnings Power Value (EPV) framework of the Columbia Business School. EPV allows us to separate the three valuation components: asset value, earnings power and growth value. This framework improves our ability to analyze what we are paying for, and gives insight into whether a stock is priced with a margin of safety. In addition, ESG (Environmental, Social and Governance) is fully incorporated in our investment process.