Face-to-face in the sunshine state

Berghuis: ‘In total we saw and talked to eighteen companies, five of which we already hold in the portfolio (American Equity Investments Life, MRC Global, Spirit Airlines, Chart Industries and Delek US Holdings). Moreover, this conference presents the ideal opportunity for attending presentations held by other companies. In some cases, we are seeing these companies at the conference for the third time in a row. Once in a while, it’s good to talk face-to-face with companies we usually keep in touch with via conference calls. Contacts are always easier once you’ve met each other.

The conference also gave us a chance to talk to the competitors of companies in our portfolio, such as SunPower (a competitor of First Solar) and Allegiant (a competitor of Spirit Airlines). In the financial sector, we spoke to seven US banks and insurers on sector trends and mutual differences. These conversations, presentations and group meetings help us to build a more comprehensive picture of the companies in which we invest.’

We look at three companies in more detail below:

“Once in a while, it’s good to talk face-to-face with companies we usually keep in touch with via conference calls. Contacts are always easier once you’ve met each other.”

Jan Willem Berghuis

American Equity Investment Life

American Equity Investment Life is a US vendor of savings and retirement policies (such as fixed index annuities). We have invested in this company since April 2016. We talked to the CEO and CFO at the conference. Before we invested in this stock, its price was under severe pressure: this was probably due to low interest rates and proposed legislation governing the sale of policies via intermediaries. Earlier this year, we reduced our position slightly after the stock price recovered sharply in response to rising long-term interest rates in the US and the possibility that the new US government would postpone and amend the proposed legislation. 

Chart Industries

This was the third year we were able to talk to the CFO of Chart Industries, a manufacturer of cryogenic equipment. This equipment is used to turn gases into liquid form, including for Liquid Natural Gas (LNG) end markets. Although demand for LNG-related products remains low, the company is working on increasing capacity in order to be ready to meet future demand.

Spirit Airlines

We saw Spirit Airlines at the conference in Orlando for the first time last year. Spirit is a US budget airline, comparable to Ryanair and Wizz Air in Europe. We added this company to the portfolio last year. We continue to see this as a stock with huge potential for growth as over the next five years the company could add 125 new routes to its current total of 220.

 

Disclaimer

This document is prepared by the fund managers of Kempen (Lux) Global Small-cap Fund (‘the Fund’), managed by Kempen Capital Management N.V. (‘KCM’). The Fund currently holds shares in American Equity Investment Life, Spirit Airlines and Chart Industries. The views expressed in this document may be subject to change at any given time, without prior notice. KCM has no obligation to update the contents of this document. As asset manager KCM may have investments, generally for the benefit of third parties, in financial instruments mentioned in this document and it may at any time decide to execute buy or sell transactions in these financial instruments. The information in this document is solely for your information. This document should not be considered to constitute an investment recommendation and it is not intended as an offer or a solicitation to buy or sell any financial instrument mentioned in this document. This document is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. The views expressed herein are our current views as of the date appearing on this document. This document has been produced independently of the company and the views contained herein are entirely those of KCM.