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 2020-03-31 (rebased)

No chart data available

Performance per 2020-03-31

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  Fund
1 month -16.4 %
3 months -22.0 %
This year -22.0 %
2017 42.3 %
2018 -21.1 %
2019 27.6 %
1 year (on annual basis) -10.0 %
3 years (on annual basis) i 0.3 %
5 years (on annual basis) i 8.7 %
Since inception (on annual basis) i 12.0 %
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 591.54 M 2020-03-31
Share class size
EUR 591.54 M 2020-03-31
Number of shares
3,627,268 2020-03-31
Net Asset Value i
EUR 190.90 2020-05-26
Transaction price i
EUR 163.90 2020-04-01
Morningstar rating â„¢

Fund characteristics per 2020-03-31

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  Fund
Number of holdings 25
Dividend yield i 4.06 %
Weighted average market capitalization i EUR 848 M
P/E ratio i 17.32
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.

Market developments per 2020-03-31

The following texts refer to the first quarter of 2020.

Performance
In the first quarter of 2020, KOP’s Net Asset Value (NAV) decreased from €209.03 to €163.08 per share, resulting in a return of -22.0%. The fund has reported an average return of +0.3% pa over the past three years and +8.7% pa over the past five years, resulting in a performance below the target average return of 10% per year.

Trading
As of 1 April 2020, the trading price was €163.90, based on the NAV of that date plus a premium of 0.5% as a result of net inflow into KOP. The number of issued shares in KOP increased by 3%, bringing the size of the fund to about €610 million. For the next trading date of 1 July 2020, an instruction deadline of 4pm on 29 May 2020 applies for orders in KOP (via Euronext) and a few days before that for the holding companies (via the Van Lanschot Kempen transfer agent).

Market review
It would be an understatement to say that the year got off to an eventful start. Over the past few weeks the COVID-19-pandemic and subsequent global lockdowns have quickly pushed a global economy that had been growing at a sound rate into a deep crisis, one which is likely to be more severe than the 2008/09 financial crisis. Moreover, the oil price dropped to record lows in the wake of the collapse of talks between Russia and Saudi Arabia, generating even greater pessimism. The correction took just 24 trading days on the financial markets: between 19 February and 23 March, the global MSCI index lost an unbelievable 33%, while European small caps were hit even harder as the MSCI Europe Small-cap Index declined by 42%.

Looking back at the past few weeks, the response from the financial markets is similar to the reaction to the virus itself. The sense of shock is enormous. COVID-19 is not fatal to the vast majority of the global population, but those with weak immune systems are especially vulnerable. In the first quarter of 2020, it was mainly weak companies that were hit hard by the economic crisis triggered by COVID-19. The KOP portfolio contains companies with strong immune systems in the shape of robust business models, solid balance sheets and strong management teams. A handful are barely noting an impact on their current situation, but most of our companies are being confronted with a sudden and sometimes total drop in demand caused by the lockdowns, which translates into enormous pressure on short-term revenues and profitability.

Portfolio developments per 2020-03-31

We reported no new participations in the first quarter, but we were well on our way to accruing a participation in the UK’s Huntsworth until in February private equity party CD&R made an offer on all outstanding shares including a premium of 50% on the equity price. At that time, KOP held a capital interest of approximately 3% of the company. Huntsworth provides marketing and communications services to the global pharmaceutical industry.

In the first quarter, KOP sold its participation in Oeneo to the family that holds the controlling interest in the company after it launched an offer for all those shares not yet in its possession in November 2019. The position in Oeneo represented slightly more than 6% of the portfolio as of year-end 2019. We had already sold a large portion of our interest at above the offer price on the open market during the application period. This brings the Oeneo chapter to a successful conclusion for us. Including dividends, since 2016 the investment in Oeneo has yielded an average annual return for KOP of about 19% and in doing so made a significant contribution to our target return of 10% per year.

The combination of a large cash position and falling equity prices has prompted KOP to start building a number of new participations, and we hope to be able to announce a new participation in the second quarter.

We are pleased with the annual results published by almost all our companies. As mentioned above, KOP’s NAV has fallen by 22% as a result of the lower equity prices in the first quarter. As is often the case, this total portfolio return is the aggregate result of very volatile share prices for individual companies. Firstly, it’s important to stress that our companies are strong enough to withstand the current crisis. Over half hold a net cash position on their balance sheets and as things stand we believe the vast majority of the portfolio to be in the safe zone. We are monitoring events closely and in active dialogue with all our companies, especially those that will experience mounting pressure on their levels of profitability in the coming weeks and months. The recent share prices are mainly a reflection of the sensitivity of their levels of profitability to the short term during the current economic crisis. The short-term investment horizon of investors in listed companies continues to amaze us. Emotions are driving trading, which is generating price volatility, which is in turn triggering emotions, which are driving trading and so on. If a company’s valuation represents all future cashflows, a halving of the earnings over a year followed by a recovery to normal levels should only lower the share price by a few percent.

The best performers in the first quarter were Avon Rubber (+6%), Forfarmers (-2%) and La Doria (-6%), for the simple reason that these companies are barely being affected by the current economic crisis. Avon Rubber sells gasmasks to the military, police and fire departments, as well as rubber components for milking machines to farmers. Forfarmers produces animal feed for North Western European farmers and La Doria makes canned Italian food products for supermarkets, mainly in Europe. This company is even profiting to a certain extent from consumers bulk buying during the pandemic.

The share prices of our industrial companies have come under severe pressure over the past few weeks, in line with the broader stock market. XP Power fell by 18%, BESI by 19%, Interroll by 24%, Nedap by 26%, Washtec by 32%, while the price of Lectra dropped by as much as 35%. This group of suppliers of high-quality (components for) machines is dependent on the investment climate at their customers. The current crisis means that investments by carwash companies (Washtec), clothing manufacturers (Lectra) and computer chip manufacturers (BESI) have been reduced to a minimum, on the one hand because of the drop in consumer demand and on the other hand because of e focus on maximum cash generation. We are therefore anticipating significantly lower short-term revenues and profitability at these companies. One remarkable share price decline was that of Acomo (-22%), the trader in tea, spices, nuts and dried fruits. We believe that this company’s short-term profitability will remain largely unaffected by the crisis and we have therefore taken advantage of the depressed share price to enlarge our position, liquidity permitting. Incidentally, this also applies to a number of other existing holdings in KOP that are currently at interesting valuation levels. For example, there is a strong chance of XP Power will see earnings growth this year, especially due to the enormous increase in demand for power converters for medical equipment.

In the first quarter we saw the largest amount of share price pressure at Coats (-45%), SUSS Microtec (-45%), SAF Holland (-50%), El.En (-51%) and Kendrion (-53%), with Coats standing out in particular. This manufacturer of threads and yarns was hit by the COVID-19 outbreak at an early stage as it has sizeable operations in Asia, including China. As global clothing and footwear sales are under pressure, Coats will probably report a considerable drop in earnings this year as well. However, the company’s balance sheet is robust and its management is implementing measures to shield earnings and cashflows as much as possible in the downward market. One such measure is suspending the dividend.

As a Northern Italian company with operations in Italy and China, El.En has found itself at the eye of the storm. By its own account it was heading for its best year ever when the COVID-19 outbreak hit it full-on in February. Its Chinese factories have since resumed operations, but their Italian counterparts remain largely at a standstill sofar. El.En has a balance sheet with a net cash position, continues to innovate and in our view will come out of this crisis even stronger.

Most of our attention has been focused on our automotive players SAF Holland and Kendrion over the past few weeks. The two companies closed 2019 with relatively high amounts of debt on their balance sheets as a result of acquisitions, and their declining profitability could make these debts excessive. Luckily SAF Holland restructured its debt in February, the upshot of which is that it faces no repayments in the short term and has sufficient levels of liquidity at its disposal. We are impressed with the decisiveness and speed at which the new CEO is tackling the current crisis. Around the world, the company is slashing expenses, stocks and accounts receivable balances in order to safeguard profitability and cashflows. Moreover, preparations are under way to profit as much as possible once the truck and trailer market recovers. In spite of a share issue in November 2019, Kendrion holds an above-average debt position resulting from the acquisition of Intorq (magnets for robotics). The company is in talks with its banks, which are being accommodating and have already promised to give Kendrion plenty of time to restore its balance sheet, also because it is still generating sound cashflows.

Over the quarter we have conducted several meetings with the prospective new supervisory board members for SUSS Microtec. Along with a number of other shareholders, we are of the opinion that SUSS Microtec’s board needs to be strengthened. The company’s profitability and cashflows are substandard and its operational and strategic management requires improvement. The SUSS technology and machines are promising, but this is simply not reflected in its levels of profitability.

All our participations are currently implementing their emergency plans in order to safeguard their profitability and cashflows. Many are taking advantage of the assistance offered by governments, particularly when it comes to covering wage costs (such as the “Kurzarbeit” scheme in Germany). However, the unprecedented uncertainty surrounding the extent and duration of the drop in demand has prompted many of the companies (including Coats, Washtec, Nedap, Kendrion, SAF Holland) to cancel or postpone (final) dividends over 2019. KOP’s long-term focus means that we can only applaud such steps. The extra liquidity at companies will not only create an additional buffer for unforeseen circumstances, it will also yield opportunities that will enable companies to emerge from this crisis even stronger. There is a possibility that these dividends will be paid later in 2020, depending on the economic impact of COVID-19 on the companies’ profitability and balance sheets.

Valuations
The value of the KOP portfolio declined across the quarter. Given the enormous uncertainty surrounding the short-term profitability of our companies, we have limited ourselves here to examining the reported earnings over 2019. The portfolio’s cash-adjusted price/earnings ratio (EV/EBIT 2019) stands at 10. Based on the assumption that our companies will revert to normal (2019) earnings levels in the medium term, we continue to believe that the portfolio allows for attractive long-term share 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 2020-03-31 (rebased)

No chart data available

Performance per 2020-03-31

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  Fund
1 month -16.4 %
3 months -22.0 %
This year -22.0 %
2017 42.3 %
2018 -21.1 %
2019 27.6 %
1 year (on annual basis) -10.0 %
3 years (on annual basis) i 0.3 %
5 years (on annual basis) i 8.7 %
Since inception (on annual basis) i 12.0 %
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
2019-05-20
Number of distributions per year
1
Dividend calendar

Risk analysis (ex post) per 2020-03-31

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  3 years Since inception
Maximum drawdown i -23.08 % -63.64 %
Tracking error i 10.15 % 9.49 %
Information ratio i 0.28 0.30
Beta i 0.79 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 (2020-03-31)

32.8 %
Netherlands
19.9 %
United Kingdom
9.3 %
Ireland
8.5 %
Switzerland
6.7 %
Germany
5.9 %
Italy
5.2 %
Singapore
5.0 %
France
2.0 %
Norway
1.9 %
Luxembourg
1.2 %
Sweden
1.6 %
Cash
Total
100 %

Top 5 holdings (2020-03-31)

17.4 %
BE Semiconductor Industries
9.3 %
Insight Liquidity Fund EUR Cash Fund
7.2 %
Avon Rubber
6.8 %
Coats
5.9 %
ForFarmers
Total
46.7 %

Sector allocation (2020-03-31)

43.7 %
Industrial Goods & Services
22.4 %
Technology
14.3 %
Food & Beverage
9.3 %
Money Market Funds
3.6 %
Construction & Materials
1.9 %
Automobiles & Parts
1.0 %
Media
0.8 %
Health Care
0.7 %
Retail
0.6 %
Oil & Gas
1.6 %
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 2016.

Other costs

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Downward swing factor i
1.50 %
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.

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. 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 of the process, we dive deeper into the ESG characteristics of a company. During the process we look at each company on a case by case basis identifying the material risks in that industry and their exposure, practices and disclosure. In this phase we use various data sources, including MSCI ESG Research and Sustainalytics. If our opinion deviates from the external ESG research providers we explain why. Furthermore we look into the company’s exposure to controversies and opportunities which could reduce or increase the ESG score.Based on the above analysis we form an opinion on the quality of a company’s ESG profile and give each firm a score (1-5). A lower score would require a higher upside potential to be included in the portfolio.

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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.