European newsletter portfolio 2016 Q1 return: -1.9%

Olivier Dambrine 11 Apr 2016

After the turbulence during the first 2 months, the STOXX600 didn’t show any significant fluctuations in March. It ended the month with a small increase of 100 basis points, from -8.7% to -7.7%. Our portfolio recorded a significant recovery of 550 basis points, from -7.4% to -1.9%. YTD alpha is 5.8, but we’re still at a loss. The portfolio continued to recover during the first week of April, so hopefully we should be able the show a profit soon.

22 stocks went up in value, and only 4 lost value. The major winners this month were:

  • Agfa-Gevaert (+16%) reported 1% growth in revenues, the first top-line growth in 4 years time. Recurrent EBITDA% came in at 8.1%, and management is confident that it will be able to further increase this to 10% for FY 2016. The company reduced its net debt by 46%, from €126m to €58m. The performance during the 4th quarter of 2015, in contrast, was weaker than expected and revenue declined by 5.5%., mainly due to inventory decisions in the hardcopy film business. Recurrent EBITDA% declined from 10.4% to 9.7%.
  • Groupe Open (+15.9%) reported excellent results for the FY 2015. Revenues were up 6.8%, and net income grew by 66%. Like-for-like revenues grew by 12.2%, and operating margins increased by 200 basis points.
  • Kvaerner (+12.8%) reported a 4th quarter revenue drop of 28% due to challenging conditions in the oil industry. Despite this decline, the company has been able to keep adjusted EBITDA at the same level, i.e., NOK175m compared to m175m in Q4 2014.

Only 1 stock experienced a major decline.

  • Prodware (-17.7%) reported revenue growth of 4%. EBITDA% showed a slight decline from 16.9% to 16.2%. Profit margins were affected by important restructuring costs in the Benelux and Germany and legal costs in the Netherlands. But analysts seemed more worried about increasing debt levels, with some of the debt being in convertible bonds, which could potentially create future dilution for shareholders.

This month we sell HKScan (-40%) added 1 year ago. We also sell Groupe Partouche (+146%).