Kempen Oranje Participaties NV

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. The environmental, social and governance (ESG) criteria are incorporated in the investment process.

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).

Management team

Michiel van Dijk, Erwin Dut, Sander van Oort, Ingmar Schaefer

Performance per 2020-12-31 (rebased)

No chart data available

Performance per 2020-12-31

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  Fund
1 month 4.2 %
3 months 14.7 %
This year 19.0 %
2017 42.3 %
2018 -21.1 %
2019 27.6 %
1 year (on annual basis) 19.0 %
3 years (on annual basis) i 6.2 %
5 years (on annual basis) i 17.8 %
Since inception (on annual basis) i 13.3 %
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

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Total fund size
EUR 866.04 M 2020-12-31
Share class size
EUR 866.04 M 2020-12-31
Number of shares
3,547,301 2020-12-31
Net Asset Value i
EUR 255.83 2021-01-25
Transaction price i
EUR 245.36 2021-01-04
Morningstar rating â„¢

Fund characteristics per 2020-12-31

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  Fund
Number of holdings 23
Dividend yield i 1.31 %
Weighted average market capitalization i EUR 1,189 M
P/E ratio i 25.78
Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

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

Developments per 2020-12-31

The following texts refer to the fourth quarter of 2020.

Performance
In the fourth quarter of 2020, KOP’s Net Asset Value (NAV) increased from €212.76 to €244.14 per share, bringing the total return over the fourth quarter to +14.7%. With a total return of +19.0% over 2020, we are pleased with how the portfolio has performed. KOP has averaged a return of +6.2% per year over the past three years and +17.8% per year over the past five years, resulting in a performance above our target of an average total return of around 10% per year in the long term.

Trading
On the trade date 4 January 2021, the trading price was €245.36, based on the NAV of that date plus a premium of 0.5% caused by net inflow into the fund. The size of the fund is €900 million as of the start of 2020. For the next trade date of 1 April 2021, an instruction deadline of 4pm on 26 February 2021 applies for orders in KOP (via Euronext) a few days before that for the holding companies (via the Van Lanschot Kempen transfer agent).

Market view
After the roller coaster first half of 2020 and a calm third quarter, the fourth quarter saw a sharp upturn in equity prices. In addition to companies publishing relatively solid third-quarter earnings reflecting strong consumer spending, the most important news was the rapid availability and high efficacy rate of a range of vaccines against the COVID-19 virus. Moreover, central banks repeated their intention to keep interest rates low, even if inflation rises to over 2%. These are the ingredients for a 2021 scenario comprising a robust economic recovery and persistently low interest rates, which should be positive for equity prices. The MSCI World Index rose by 15.0% in the fourth quarter of 2020 and the MSCI European small cap index by 16.8%.

Portfolio
A great deal has already been written about the financial markets in 2020. We prefer to leave detailed economic and political analyses of the impact of the COVID-19 crisis to other commentators and concentrate instead on how things are at the 18 companies that we co-own.

For KOP, the year had two faces. In February and March we saw panic erupt on the markets, severely squeezing the equities of our cyclical companies such as BESI, Suss Microtec, Kendrion, Coats, Lectra and SAF Holland (semiconductors, clothing and automotive) but with defensive names such as ForFarmers, La Doria, Acomo and Avon Rubber performing relatively well.

A sharp upturn occurred on the market after governments and central banks announced enormous support packages at the end of March, and this was further boosted by the news in November that vaccines would quickly become available. The cyclical names in particular underwent a recovery after the summer, partly aided by better-than-feared second and third-quarter earnings. SAF Holland (+62%), BESI (+35%), Nedap (+26%) and Lectra (+24%) noted the largest price gains in the fourth quarter. SAF Holland’s equity price rallied strongly from a weak level following the outbreak of the COVID-19 crisis. Demand for trucks and trailers appears to be recovering well (partly due to e-commerce) and the measures the new CEO has introduced to improve efficiency are having a clear positive impact on margins. The focus on cash has also ensured that the company’s debt ratios have remained within the limits agreed with the banks.

BESI’s equity price profited from the further recovery in the semiconductor industry as part of the accelerated digitisation of our society. The company continues to seek improvements to its internal and cost structures, as a result of which it’s expected to achieve record earnings in the coming upcycle. BESI also announced a partnership with US company Applied Materials (AMAT). The ongoing miniaturisation van chips, known as Moore’s Law, is increasingly dependent on back-end operations in the chip industry, in which BESI operates. The partnership with AMAT underlines BESI’s position as a leader in the advanced packaging market.

There was significant corporate news on Acomo as it announced the acquisition of Tradin, an international merchant of organic ingredients (including dried products, fruit, cocoa, oils, coffee and high-end juices). Tradin’s global network and focus on fast-growing organic products will serve to boost the scale, diversification and growth potential of Acomo. The acquisition will increase the size of Acomo by about one third. It has partly been funded by a new share issue worth €96 million. As one of the largest shareholders in Acomo we were involved in the acquisition of Tradin before it was made public. We believe that this step will improve both the growth profile of the company and share liquidity and could ultimately lead to a higher market valuation. We have therefore subscribed to the new Acomo share issue and maintained our capital interest in the company at the same level.

Other positive news came from Alliance Pharma, which announced its acquisition of US company Biogix, which focuses on the relief of menopause symptoms via its vitamin & mineral product Amberen. With revenue of US$27 million it will be the second largest brand in the Alliance Pharma portfolio and boost the company’s position on the all-important US market. We expect the company to make a number of further attractive acquisitions in 2021.

The equity prices of Avon Rubber (-24%), ForFarmers (+2%) and XP Power (+8%) lagged behind in relative terms, with there being no significant company news on the latter.

Avon Rubber saw its equity price drop sharply in the fourth quarter. The company reported a delay to the start of the manufacture and sale of new generation bulletproof vests (via the acquisition of Ceradyne announced in 2020). During what is known as a First Article Test, the impact of a bullet on one of the tested vests was outside the margin of error, leading to the product’s structure requiring adjustment and resulting in an expected delay to delivery of about six months. In the wake of a price gain of 94% in the first nine months of the year, its price fell by 24% in the fourth quarter.

ForFarmers reported weak results over the third quarter. The company also announced the acquisition of De Hoop Mengvoeders. De Hoop earned revenue of €110 million in 2019, primarily in the Dutch broiler chicken market. This is the company’s first acquisition since it announced its new strategy at the Capital Markets Day in September 2020, which contained a greater focus on acquisitions. We talked to the Forfarmers Supervisory Board in the fourth quarter. During this meeting, we again expressed our concern about the company’s track record on acquisitions and also on its operational management. An improvement in both elements combined with a solid balance sheet and the attractive valuation of ForFarmers’ equities should contribute positively to KOP’s future performance.

In addition to our new stakes in DiscoverIE and Alliance Pharma, we accrued another position in 2020, this time in Sweden’s Momentum Group AB. The company is a leading reseller of industrial consumables and components, such as tools, spare parts, screws and protective clothing. Its products are sold via direct (online) sales and over 100 of its own stores, mainly to industrial customers but also to forestry, construction and installation companies as well as government bodies. Momentum also provides related services such as stock management, automation and maintenance of industrial motors.

Momentum primarily operates in Sweden, Norway and Finland. In 2020, Momentum acquired the listed Swedish player Swedol, which over the next few years will lead to an acceleration in revenue growth and considerable cost savings. Its high cashflows and robust balance sheet mean there is capacity for more acquisitions that could further consolidate Momentum’s position on the Scandinavian market.

We’ve been monitoring Momentum since it split from industrial conglomerate Bergman & Beving in 2017 and accrued a position in the company over the past few quarters after it announced its acquisition of Swedol. The participation in Momentum AB represents about 4% of the KOP portfolio.

Even after completing three new participations in 2020, the KOP portfolio still contains a number of new participations under construction. We hope to be able to announce a new participation in 2021.

Looking back over the past few years, a large part of KOP’s success lies in the fact that we have managed to identify a small number of overlooked companies with principled and rational management teams that operate in fundamentally-sound industries. We subsequently hold these companies for the long term and attempt to add value to them in our capacity as an engaged shareholder.

Success at identifying overlooked equities derives from our investment universe of European micro caps that are often barely monitored by institutional investors or analysts. It’s rare for research to be published on the majority of the companies we hold in the portfolio and that are on our radar. One disadvantage is that these equities sometimes have low trading liquidity, but the advantage is that they can be incorrectly priced, which generates opportunities for us.

As we‘ve often said in previous quarterly reports, as a long-term engaged shareholder we seek fundamentally-sound companies. They need to operate in a healthy industry, be profitable, occupy a solid market position, be well-managed and possess a robust balance sheet. In a year such as 2020 these quality criteria have been particularly essential to the portfolio’s success.

As a long-term engaged shareholder we regularly witness fundamental and/or cyclical changes at the companies and, if these are positive, we profit from them. It’s often precisely after such events that the shares’ valuation undergo a correction, which can in turn make a significant contribution to KOP’s performance. Such fundamental changes might include divestments, acquisitions, product launches or the appointment of new management members.

At El.En, for instance, we saw the sale of its interest in subsidiary Cynosure and Avon Rubber sold Avon Engineered, both of which improved their respective company profiles and helped their share prices. The fact that we know the company through and through enabled us to reduce our position in BESI at the right moments in the multi-year cycle and buy back it later, while we bought XP Power just before the cyclical upturn in the semiconductor industry. We bought unknown Coats after it moved its listing from Australia to the UK, bought Kendrion after its current management team took up their posts and Momentum after it doubled in size due to the acquisition of industry peer Swedol.

Finally, as a shareholder it’s sometimes necessary to initiate a positive change ourselves by exerting pressure on our companies’ management teams. The appointment of new management teams at SAF Holland and Suss Microtec are good examples of this.

Valuations
The value of the KOP portfolio increased across the quarter. The portfolio’s cash-adjusted price/earnings ratio (EV/EBIT 2021E) stands at 15. This is high from a historic perspective but given the persisting low interest rates we continue to believe that our portfolio enjoys long-term price potential.

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

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

Performance per 2020-12-31 (rebased)

No chart data available

Performance per 2020-12-31

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  Fund
1 month 4.2 %
3 months 14.7 %
This year 19.0 %
2017 42.3 %
2018 -21.1 %
2019 27.6 %
1 year (on annual basis) 19.0 %
3 years (on annual basis) i 6.2 %
5 years (on annual basis) i 17.8 %
Since inception (on annual basis) i 13.3 %
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

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Distributing
Yes
Last dividend
EUR 3.80
Ex-date last dividend
2020-06-05
Number of distributions per year
1
Dividend calendar

Risk analysis (ex post) per 2020-12-31

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  3 years Since inception
Maximum drawdown i -23.08 % -63.64 %
Tracking error i 10.14 % 9.46 %
Information ratio i -0.28 0.26
Beta i 0.76 0.84
Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

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

Geographic allocation (2020-12-31)

26.0 %
Netherlands
24.9 %
United Kingdom
11.0 %
Germany
8.4 %
Switzerland
6.7 %
Italy
6.1 %
France
6.0 %
Singapore
4.1 %
Sweden
3.8 %
Ireland
2.0 %
Cash
1.1 %
Norway
Total
100 %

Sector allocation (2020-12-31)

47.4 %
Industrial Goods & Services
19.4 %
Technology
14.4 %
Food & Beverage
5.6 %
Construction & Materials
4.0 %
Automobiles & Parts
3.8 %
Money Market Funds
3.4 %
Health Care
2.0 %
Other
Total
100 %
Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

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

 

SWING FACTORS

An overview of the current swing factors are available here.

Ongoing charges

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Management fee i
0.75 %
Service fee i
0.20 %
Expected ongoing charges i
0.95%
Ongoing charges last financial year i
0.95 %
The Ongoing Charges Figure of the last financial year relates to 2019.

Other costs

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

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

Share class details

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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.
Depositary and custodian
BNP Paribas Securities Services S.C.A.
Morningstar rating â„¢

Tradability

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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 N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

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

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

Kempen's vision & mission

Kempen Capital Management is an asset manager that believes in stewardship and investment focusing on the long-term for the benefit of all stakeholders. Value creation is at the heart of the services we provide to our clients. We believe that being an engaged shareholder on environmental, social and governance (ESG) issues and retaining a long-term focus, is critical to helping our clients to preserve and create sustainable wealth that has positive real world impact and economic returns.

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Kempen wide approach to responsible investment

We are committed to create sustainable alpha. The four pillars of our ESG-policy are:

  • ESG integration: Ensuring sustainability risks and opportunities are adequately considered in our investment analysis and processes.

  • Exclusion & avoidance: Not investing in companies involved in controversial activities or conduct.

  • Active ownership: Being responsible stewards of our clients’ capital and using our influence through engagement and voting to improve corporate behaviour on specific ESG issues and achieve positive change

  • Positive impact: Investing with an objective to achieve positive real world outcomes and impact, such as contributing to the UN Sustainable Development Goals.

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To put our mission and vision into practice we engage with our investee companies on a wide array of strategic, financial, and ESG topics. As an active owner we use our influence to improve our investee companies’ ESG performance.  This helps us address some of the most pressing and important sustainability issues facing business and the world. Our focus themes for engagement are: human rights, labour rights, climate change and governance.

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Through collaboration with other investors and industry think tanks we contribute to the development of principles and standards of corporate responsibility both at sector levels, as well as investee company level.

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Our full voting records are available here.

Climate change

As a long-term investor, we believe climate change represents a systemic risk facing the economy, society and environment. We want to consider the risks and opportunities this presents to our investments in the coming decades. We have therefore set a long-term commitment (2050), a mid-term ambition (2030) and short-term objectives (2025).

  •     2050 commitment: Net-zero investor.
  •     2030 ambition: To align with a Paris Agreement pathway (listed and non-listed investments) and Dutch Klimaatakkoord.
  •     2025 objectives: To align with a pathway towards achieving the Paris Agreement (listed investments) and Dutch Klimaatakkoord goals.[1]

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The Kempen climate change policy can be found here (under climate change policy).

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[1]We use carbon intensity as a metric to come to the pathway of net-zero emissions. As we care about the direction of travel and reduction of carbon emissions in the economy, it might be that the actual reducing trend may deviate from the suggested average trend line. The pathway is derived from the pathway of the EU Benchmarks.

Our fund approach to responsible investment

Kempen’s ESG policy is fully implemented in our fund’s investment process across the three relevant pillars of: Exclusion, ESG integration and Active ownership.

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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 a long-term engaged shareholder. We typically engage with our investee companies on a regular basis. The close relationships with investee companies in combination with our ownership level in each company enable us to influence the agenda of the annual meetings. Furthermore, we always vote and comment on annual meetings.

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The figure 'ESG-integration in the investment process' is a step-by-step representation of how Kempen’s ESG policy is integrated into the investment process.

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1.Exclusion

KOP excludes investment in entities involved in the production tobacco and of controversial weapons, such as cluster munitions, anti-personnel mines, nuclear warheads, chemical and biological weapons. In addition, we exclude pure coal players and pure players involved in tar sands, as these activities have an adverse impact on climate change. We use MSCI ESG Research data to automatically screen and remove companies from our universe.

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The next step in our process, the ‘Quick Scan’ phase, helps us to avoid companies that do not meet our sustainability screening criteria based on their activities and conduct. We apply a checklist to screen each company using MSCI ESG Research and Sustainalytics data.

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2. ESG integration

In the fundamental analysis phase, we dive deeper into the ESG characteristics of a company. During the process, we focus on each company on a case-by-case basis, looking at the material risks and opportunities in that specific industry, the firm’s exposure, as well as practices and disclosure. In this phase we use various data sources, including MSCI ESG Research and Sustainalytics. Based on the above analysis, we form an opinion on the quality of a company’s ESG profile and give each company a score (1-5). The scores are linked to our investment cases, where a lower score would require a higher upside potential.

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3. Active ownership

As active long-term investors we perform comprehensive engagements with our portfolio companies. We strongly believe that our level of engagement with our portfolio companies is much deeper than that of our competitors. We frequently speak with the management teams of our portfolio companies. Each controversial item, as well as every individual engagement, is well-documented. We monitor the progress the company is making and continue to use our influence to create positive change.

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Exercising our voting rights is also an essential part of our responsible investment philosophy. We are actively engaging with our portfolio companies and make remarks on the agendas of annual and extraordinary meetings. The fund’s close relationships with investee companies in combination with our ownership level in each company enable us to influence the agenda of the annual meetings. We always vote the shares of investee companies and if necessary attend annual meetings to stress our discussion points to management, potentially in collaboration with other stakeholders.

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Kempen’s ESG Team also performs a quarterly screen on our portfolio and may propose engagement with low ESG performers. The results of this screening are discussed in a separate meeting and an action list is created based on the outcomes of this meeting.

Risks

For more information about the mid and long term risks associated with the investments:

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Although Kempen Capital Management N.V.’s information providers, including without limitation, MSCI ESG Research LLC and its affiliates (the “ESG Parties”), obtain information from sources they consider reliable, none of the ESG Parties warrants or guarantees the originality, accuracy and/or completeness of any data herein. None of the ESG Parties makes any express or implied warranties of any kind, and the ESG Parties hereby expressly disclaim all warranties of merchantability and fitness for a particular purpose, with respect to any data herein. None of the ESG Parties shall have any liability for any errors or omissions in connection with any data herein. Further, without limiting any of the foregoing, in no event shall any of the ESG Parties have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

ESG Report
Screening MSCI ESG research
Screening MSCI ESG research
UN global impact
ESG integration in the investment process
ESG integration in the investment process
Bron EN
disclaimer
Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

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