European Assets starts new position despite 'anaemic' portfolio activity
The European Assets trust initiated a position in Nordic private online gambling company Betsson during the first six months of the year, as well as selling a Greek-based jewellery firm at a loss.
Lead investment manager Sam Cosh writes in the £83.4m trust’s latest financial results that portfolio activity was “anaemic” over the six months to June 30 but one acquisition was made and three stocks were sold.
Commenting on the purchase of Nordic business Betsson, Cosh says: “Private online gambling in the region is still a relatively small part of the market and Betsson is set to take advantage of its growth.
“The company trades at a substantial discount to its listed peers, yet offers greater growth prospects.”
Cosh also reveals that jewellery and fashion accessory firm Follie Follie was sold over the six-month period, despite the group’s strong international brands and “appealing” valuation.
“We were concerned that the potential of a Greek exit from the euro would cause a permanent loss in capital,” the manager writes. “We were not prepared to take this risk and sold the position, despite incurring a loss.”
Other disposals during the first half of 2012 were Netherlands bedroom furnishings company Beter Bed and Geran bathroom and kitchen firm Joyou. Both were sold as they no longer met the trust’s “quality hurdle”.
Cosh adds that the fund’s portfolio structure remains similar to that seen at the end of 2011, with the fund at the upper weighting in its ‘deep value’ and ‘transformation/recovery’ segments in expectation of the market’s recovery from its current “excessively pessimistic” levels.
The European Assets trust’s results show the fund’s net asset value increased by 8.3 per cent in sterling terms over the six months to June 30, outperforming the 1.9 per cent rise in the HSBC Smaller Europe ex UK Index benchmark.
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