Kempen Oranje Participaties N.V.

Profile

Kempen Oranje Participaties N.V. (KOP) offers the opportunity to invest in small-sized European companies. KOP invests in shares of undervalued companies and aims to hold 5% or more of the paid up nominal capital of each company.

KOP positions itself as an engaged shareholder and aims to generate a long term total return of 10% on an annual basis (on the basis of capital gains and dividends).

On 28 September 2015 Kempen European Participations N.V. (KEP) was merged with KOP, whereby the KEP shares were converted into KOP shares. More information about this merger can be found under the Documents tab on this webpage.

Management team

Michiel van Dijk, Erwin Dut, Sander van Oort

Performance per 2018-09-30 (rebased)

No chart data available

Performance per 2018-09-30

Slide to see more
  Fund
1 month -2.3 %
3 months -1.1 %
This year -7.4 %
2015 25.7 %
2016 32.8 %
2017 42.3 %
1 year (on annual basis) -3.7 %
3 years (on annual basis) i 26.2 %
5 years (on annual basis) i 20.6 %
Since inception (on annual basis) i 13.4 %
As of 1 July 2015 the investment policy of Kempen Oranje Participaties N.V. has changed. In addition to Dutch and Belgian companies it is now also allowed to invest in other European companies. Performance is shown after deduction of ongoing charges and including the reinvestment of dividend that has been paid out. The value of your investments may fluctuate. Past performance provides no guarantee for the future.
More information can be found on the documents page of this fund

Key figures

Slide to see more
Total fund size
EUR 660.02 M 2018-09-30
Share class size
EUR 660.02 M 2018-09-30
Number of shares
3,359,279 2018-09-30
Net Asset Value i
EUR 186.10 2018-11-12
Transaction price i
EUR 197.46 2018-09-30
Morningstar rating â„¢

Fund characteristics per 2018-09-30

Slide to see more
  Fund
Number of holdings 22
Dividend yield i 2.92 %
Weighted average market capitalization i EUR 859 M
P/E ratio i 17.87
Kempen Capital Management NV (KCM) is the management company of Kempen Oranje Participaties N.V. (the Fund). KCM is authorised as a management company and regulated by The Netherlands Authority for the Financial Markets. The Fund is registered under the license of KCM at the The Netherlands Authority for the Financial Markets.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. These documents are available on the website of KCM (www.kempen.com/investmentfunds). The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Market developments per 2018-09-30

The following texts refer to the third quarter of 2018.

Team
In August, we were confronted with the totally unexpected death of our colleague Joop Witteveen. Along with his team, among other things Joop was responsible for the Kempen Oranje Participaties fund. In Joop we have lost a highly-valued colleague with unequalled enthusiasm for his job and clients. Team members Erwin Dut, Michiel van Dijk and Sander van Oort will work to continue Joop’s legacy.

Performance
In the third quarter of 2018, KOP’s Net Asset Value (NAV) declined by 1% from €198.72 to €196.48 per participation. The return over the first nine months of 2018 therefore amounted to -7.4%. The average return over the past three years was 25.3% per year. Higher valuations, rising interest rates and growing economic uncertainty have caused the market prices of a number of our companies to fall this year in the wake of several strong years.

Trading
As of 1 October 2018, the fund’s trading price was €197.46, based on the current NAV including a premium of 0.5% caused by net inflow into the fund. As a result of the decrease in the trading price, KOP has declined in size to about €670 million, although the number of issued KOP shares has increased by 1.3%. We were again able to welcome new participants to the fund, including in the new holding company Elbe. We continue to see interest from new and existing clients, especially given that prices are being squeezed somewhat. For the next trading date of 2 January 2019, an instruction deadline of 4pm on 30 November 2018 applies for orders in KOP (via Euronext) and a few days before that for the holding companies (via the Kempen transfer agent).

Market review
Volatility returned in the first nine months of 2018 and it has left its mark on the equity and fixed income markets. On 5 and 8 February, the S&P index noted its largest daily drops of the past five years. A fresh political storm in Italy caused 10-year bonds to lose 10% of their value in September. Combined with difficult Brexit negotiations and the slowing economy in Germany, the level of risk has increased dramatically in Europe over the past few months and there are plenty of reasons for international investors to turn their backs on the region. European equity funds therefore witnessed substantial outflow and at +7% the S&P500 performed much better in the third quarter than the Euro Stoxx 600, which was up by 1%. On top of the political and economic risk, rising commodity prices (including oil) are increasingly squeezing corporate profits.

Over the past few months, we have seen not only volatility but also a decrease in liquidity in the market. We often view market jitters as an opportunity for accruing or expanding participations at attractive prices, but the restricted liquidity in the market makes this challenging.

In the third quarter, the European small-cap index decreased by over 1%, whereby cyclical sectors in particular performed considerably worse, as the current uncertain climate is prompting investors to express a clear preference for structural growth and predictability. KOP performed in line with the market in the third quarter.

Portfolio developments per 2018-09-30

The ebb and flow of volatility and liquidity are part and parcel of investing in European small caps and this is why our investment philosophy of being long-term shareholders in sound companies is so enormously important. We continue to construct a robust portfolio containing high-quality companies, with attractive equity valuations and a sufficient level of marketability. We spend all our time conducting fundamental analyses of companies, with a view to better understanding both their strengths and weaknesses, by studying their operating results and those of their competitors and by holding frequent talks with management and sector peers. It is of primary importance to us that our companies perform well and that they create sufficient shareholder value in the long term.

Yet high volatility and low liquidity make it difficult to accrue participations at attractive prices and substantially reduce existing positions at high prices within a short period of time. For instance, in April the BESI equity dropped 33% in price within a two-week period in April and a participation under accrual rose by 35% in the four weeks after we had started to buy it. The low level of liquidity in the market means that the accrual of new participations is going slowly and we have no new participations to report over the third quarter. However, we have managed to sell the remainder of our participation in Beter Bed in its entirety. We believe that a repositioning of Beter Bed in Germany will be an expensive and time-consuming process with a highly uncertain outcome in today’s era of online shopping.

In spite of the fact that the companies held in the KOP portfolio face specific operational challenges, in general they continue to evolve well.

In the first half of 2018 our largest participation, Coats, saw its operating result grow by 13% and it confirmed that business is going well by increasing its dividend by 14%. Moreover, Coats is expeditiously reducing its pension risks, creating greater capacity for dividends and acquisitions. This global market leader in threads and yarns continues to make excellent strategic and operational progress and we expect persisting earnings growth over the next few years. The Coats equity price rose by 6% in the past quarter.

Another equity that performed strongly in the third quarter was Switzerland’s Interroll. This market leader in rollers for logistics systems is making the most of a global market undergoing structural growth. This has partly been driven by the explosive growth in e-commerce, which requires the expansion and automation of distribution centres. The reported revenue and earnings growth of nearly 20% in the first half of 2018 was very impressive and investors rewarded this with a price gain of 10% in the third quarter.

In September, we held a meeting with the CEO of Washtec. Following a dramatic recovery in its results over the past few years, Washtec has identified further opportunities for increasing its profitability and accelerating growth, partly as a result of improved coordination between purchasing, production and sales and via the modular manufacture of products. Following fresh momentum in North America, China is now also displaying interest in automatic car wash systems.

QSC announced its intention to sell its largest division, Telecom, and reported that it already has a large number of interested parties. This means that the rest of QSC is attractively valued and increases the chance of a substantial capital payment to shareholders. We have expressed our preference clearly in talks with the management on capital allocation. The equity price increased by 16% in the third quarter in the wake of the announcement of the potential sale of Telecom.

Nedap saw its equity price rise by 11% during the quarter as a reward for the impressive 10% revenue growth reported over the first half of 2018. In addition to greater focus in the product portfolio and a reduction in internal expenses as a result of outsourcing production, Nedap is increasingly a software company that can increase its scalability and future profitability.

ForFarmers is also doing well thanks to a combination of product innovation (lower phosphate emissions, more organic feed) and attractive investments (Belgium, Poland, Germany). In doing so, ForFarmers continues to perform in line with its target of about 5% annual earnings growth. However, there remains the risk of a potential Brexit impact on its UK business. CEO Yoram Knoop will explain his outlook on this at the KOP event on 30 October 2018.

BESI’s equity price shot up by 140% between March 2017 and March 2018, only to drop by 60% up to the end of September 2018 (-21% in the third quarter). After eight strong quarters, the semiconductor equipment cycle deteriorated in the second and third quarters of 2018 and there is now uncertainty as to how long the downward cycle will persist (normally about six quarters). As a company BESI is in better shape than ever, with innovative machines and a solid balance sheet. Although we view BESI as an attractive long-term investment, throughout 2017 and at the start of 2018 we substantially reduced our position in BESI while prices were high. The equity valuation of BESI has become significantly more attractive in the wake of the drop in equity price.

The Kendrion equity also had a tough third quarter with a price drop of 15%. The Capital Markets Day in August, at which the company relinquished its revenue growth target of 5% per year and reiterated its margin target of 10%, failed to capture the enthusiasm of investors. With its exposure to an uncertain European car industry in general and diesel technology in particular, over the next few quarters Kendrion will need to regain the confidence of investors by means of persisting earnings growth and new product launches, including for electric cars.

SAF Holland will also need to regain the confidence of investors after the poor results earned by its North American subsidiary in 2017 and the first half of 2018. Rising steel prices and a far-reaching reorganisation during a period in which the market was undergoing a strong recovery combined to generate many additional expenses and delays, wiping out SAF Holland’s US profits. The company promises a recovery in earnings in 2019 and 2020, but investors are keeping their powder dry for the time being, in spite of the excellent trends in Europe and Asia.

Although El.En reported net earnings growth of 24% over the first half of 2018, its equity was squeezed in the third quarter by the general market malaise in Italy triggered by the political and economic uncertainty. Based on product innovation in Medical and growing market shares in Industrial, we expect El.En to continue to note double-digit growth over the next few years. In the long term, we believe that the market price will revert to reflecting the excellent strategic and operational developments at El.En.

Valuations
The earnings growth at our companies and lower equity prices led to a more attractive valuation for the KOP portfolio in the third quarter. The portfolio’s cash-adjusted price/earnings ratio (EV/EBIT 2019E) declined from 13 at the end of June 2018 to over 12 at the end of September 2018. This translates into an increase in the portfolio’s price potential.
Kempen Capital Management NV (KCM) is the management company of Kempen Oranje Participaties N.V. (the Fund). KCM is authorised as a management company and regulated by The Netherlands Authority for the Financial Markets. The Fund is registered under the license of KCM at the The Netherlands Authority for the Financial Markets.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. These documents are available on the website of KCM (www.kempen.com/investmentfunds). The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Performance per 2018-09-30 (rebased)

No chart data available

Performance per 2018-09-30

Slide to see more
  Fund
1 month -2.3 %
3 months -1.1 %
This year -7.4 %
2015 25.7 %
2016 32.8 %
2017 42.3 %
1 year (on annual basis) -3.7 %
3 years (on annual basis) i 26.2 %
5 years (on annual basis) i 20.6 %
Since inception (on annual basis) i 13.4 %
As of 1 July 2015 the investment policy of Kempen Oranje Participaties N.V. has changed. In addition to Dutch and Belgian companies it is now also allowed to invest in other European companies. Performance is shown after deduction of ongoing charges and including the reinvestment of dividend that has been paid out. The value of your investments may fluctuate. Past performance provides no guarantee for the future.

Dividends

Slide to see more
Distributing
Yes
Last dividend
EUR 3.60
Ex-date last dividend
2018-05-21
Number of distributions per year
1
Dividend calendar

Risk analysis (ex post) per 2018-09-30

Slide to see more
  3 years Since inception
Maximum drawdown i -7.38 % -63.64 %
Tracking error i 7.24 % 9.33 %
Information ratio i 1.67 0.31
Beta i 0.93 0.85
Kempen Capital Management NV (KCM) is the management company of Kempen Oranje Participaties N.V. (the Fund). KCM is authorised as a management company and regulated by The Netherlands Authority for the Financial Markets. The Fund is registered under the license of KCM at the The Netherlands Authority for the Financial Markets.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. These documents are available on the website of KCM (www.kempen.com/investmentfunds). The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Geographic allocation (2018-09-30)

26.7 %
Netherlands
14.6 %
United Kingdom
13.3 %
Germany
11.9 %
France
11.4 %
Luxembourg
7.9 %
Switzerland
7.5 %
Italy
2.6 %
Norway
1.3 %
Ireland
0.1 %
Belgium
2.9 %
Cash
Totaal
100 %

Top 5 holdings (2018-09-30)

10.7 %
Coats Group
8.9 %
Washtec
8.3 %
Forfarmers
7.9 %
Interroll
6.1 %
JP Morgan Euro Liquidity C
Totaal
41.9 %

Sector allocation (2018-09-30)

46.6 %
Industrial Goods & Services
23.3 %
Food & Beverage
11.2 %
Technology
6.1 %
Money Market Funds
5.2 %
Automobiles & Parts
2.5 %
Retail
1.3 %
Personal & Household Goods
0.9 %
Telecommunications
2.9 %
Other
Totaal
100 %
Kempen Capital Management NV (KCM) is the management company of Kempen Oranje Participaties N.V. (the Fund). KCM is authorised as a management company and regulated by The Netherlands Authority for the Financial Markets. The Fund is registered under the license of KCM at the The Netherlands Authority for the Financial Markets.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. These documents are available on the website of KCM (www.kempen.com/investmentfunds). The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Ongoing charges

Slide to see more
Management fee i
0.75 %
Service fee i
0.20 %
Expected ongoing charges i
0.95%
Ongoing charges last financial year i
0.94 %
The Ongoing Charges Figure of the last financial year relates to 2016.

Other costs

Slide to see more
Upward swing factor i
0.50 %
Downward swing factor i
1.50 %
Kempen Capital Management NV (KCM) is the management company of Kempen Oranje Participaties N.V. (the Fund). KCM is authorised as a management company and regulated by The Netherlands Authority for the Financial Markets. The Fund is registered under the license of KCM at the The Netherlands Authority for the Financial Markets.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. These documents are available on the website of KCM (www.kempen.com/investmentfunds). The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Share class details

Slide to see more
Investor type
Institutional & Private
Distributing
Yes
Objective
To generate a long term return of 10% a year (on the basis of capital gains and dividends)
Investment category
Small-caps
Universum
European small-caps
Inception date
1985-08-29
Domicile
The Netherlands
May be offered to all investors in
The Netherlands
May be offered to professional investors only in
United Kingdom
UCITS status i
No
Status
Open-end i
Base currency
EUR
Share class currency
EUR
Management company
Kempen Capital Management N.V.
Custodian
BNP Paribas Securities Services S.C.A.
Morningstar rating â„¢

Tradability

Slide to see more
Listed
yes, listed on the NAV Trading Facility of Euronext
Subscription/Redemption Frequency
Quarterly, on the first business day of January, April, July en October
ISIN i
NL0000440675
Entry period purchase order
Approximately 32 calendar days before the start of each quarter
Entry period sell order
Approximately 32 calendar days before the start of each quarter
Details
Orders must be sent by the bank or broker to the NYSE Euronext Trading Facility on the last business day of November, February, May and August, no later than 04.00 PM Amsterdam time in order to be executed on the next dealing day.
Kempen Capital Management NV (KCM) is the management company of Kempen Oranje Participaties N.V. (the Fund). KCM is authorised as a management company and regulated by The Netherlands Authority for the Financial Markets. The Fund is registered under the license of KCM at the The Netherlands Authority for the Financial Markets.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. These documents are available on the website of KCM (www.kempen.com/investmentfunds). The value of your investment may fluctuate. Past performance provides no guarantee for the future.
Kempen Capital Management NV (KCM) is the management company of Kempen Oranje Participaties N.V. (the Fund). KCM is authorised as a management company and regulated by The Netherlands Authority for the Financial Markets. The Fund is registered under the license of KCM at the The Netherlands Authority for the Financial Markets.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. These documents are available on the website of KCM (www.kempen.com/investmentfunds). The value of your investment may fluctuate. Past performance provides no guarantee for the future.

KCM Vision

Kempen Capital Management is an asset manager with a long-term investment approach. We strongly believe in engaged shareholdership that benefits all stakeholders. As a long-term responsible investor, we firmly believe that active ownership and shareholder engagement contribute to positive change across the board.

Our KCM wide approach to responsible investment

To put our vision into action we engage with our investment targets on a wide array of strategic, financial, environmental, social and governance (ESG) topics. Our long-term investment worldview paired with thorough analysis and an experienced and diverse ESG team allow us to use both voting and engagement as means to consistently encourage positive change. Through this process of constructive engagement, we are able to contribute to the development of principles and standards of corporate responsibility within companies that we invest in. Our full voting records are available here.

Our fund approach to Responsible Investment

  • Continuous dialogue with company management through one-on-one meetings. Meetings with division directors, peers and join analyst and client events. If necessary seek dialogue with the supervisory board
  • Actively involved during the AGMs through the use of our voting rights. We make remarks on the agenda if necessary and we stress our discussion points with the company at the AGM
  • Companies themselves also have the ability to seek the dialogue with us. We provide feedback on corporate strategy, governance and communication at AGM's and in one-on-one's
  • We are focused on the creation of shareholder value, where the company of course has to take into account all stakeholders
  • All holdings are screened by MSCI on sustainability items, if necessary we engage with management on sustainability issues with help from our experts in Edinburgh

Kempen Capital Management NV (KCM) is the management company of Kempen Oranje Participaties N.V. (the Fund). KCM is authorised as a management company and regulated by The Netherlands Authority for the Financial Markets. The Fund is registered under the license of KCM at the The Netherlands Authority for the Financial Markets.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. These documents are available on the website of KCM (www.kempen.com/investmentfunds). The value of your investment may fluctuate. Past performance provides no guarantee for the future.