European newsletter portfolio 2015 FY return: 49.6%

Olivier Dambrine 13 Jan 2016

In December, the European markets showed a significant decline. The STOXX600 finished the year with a YTD return of 6.8%, 560 basis points lower than the 12.4% at the end of November. Our portfolio didn’t follow the market and instead added another 420 basis points on top, finishing at a YTD return of 49,6%. That’s the strongest yearly return posted so far in the history of this portfolio, beating the previous record of 39,7% in 2013 by 990 basis points. We also broke the alpha record, achieving an alpha of 42.8, significantly higher than 22.5% in 2013. (The STOXX600 had a 17.2% return in 2013)

This is an exceptional result and one which will be difficult to reproduce in the future. However, we seem to have a winning strategy as we have managed to beat the market for the past 5 years in a row.

Half of the positions increased in value. 7 stocks showed increases of more than 10%. The top 3 contributors were:

  • High Co (+21.9%) reported excellent results for the third quarter at the end of October. Revenues increased 4.8% year on year, mainly due to strong results in France, where its digital unit grew by 32%. Its international unit was able to return to growth.
  • Corticeira Amorim (+9.9%) reported record sales and an increase of 7.7% in sales for the first 9 months of the year. It recorded growth in all its business units, led by a 9.4% increase in its cork stopper BU. Clearly, the traditional cork stoppers are still selling, and the anticipated replacement by metal tops is not taking place at the speed some experts expected.
  • Groupe Partouche (+23.8%) reported Q4 revenues of 100.6m compared to 99.8m a year ago. At the end of October, the company halved net debt to €65.4m compared to €128.3m one year ago.

Only Rottneros (-11.9% ) posted a drop worth mentioning but this came after it increased 68.7% in value during the previous month.

This month, we selected a small French IT company and a Canadian cardboard and tissue manufacturer.

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