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Carmignac Portfolio Long Short European Equities: Letter from the Fund Manager

[Management Team] [Author] Heininger Malte
Author(s)
Malte HEININGER
Published on
November 14, 2024
Read time
2 minute(s) read

Dear investors,

Our fund delivered a quarterly performance of -2.26%, in the F EUR share class, net of fees, while the year-to-date performance stands at +16.54% at the end of September.

Despite the negative performance for the quarter, the portfolio benefited from strong contributions from both our Long and Short ideas.

On the long side, our core positions in SAP and Meta, and our trading positions in Deutsche Telekom and Fresenius performed well with strong Q2 numbers and positive earnings momentum.

Our short positions suffered from the sudden market recovery, particularly our Tech shorts like Salesforce and Micron. At the same time, our Core Long position in Nova showed poor performance being down around 11% after two strong quarters at the beginning of the year.

The Carmignac Portfolio Long Short European Equities strategy attributions by bucket were:

Core Longs-3.19+21.33
Trading Longs+2.78+5.06
Relative Value/Special Sit+0.05+0.21
Alpha Shorts-3.23-2.89
Hedging+0.04-4.25

Q3 was a very volatile quarter. While most markets ended the quarter higher, the headline numbers masked some massive turmoil intra-quarter. The SOX dropped 25% from its July peak, the Nasdaq had an almost 14% pullback and the European market had a close to 10% correction. Meanwhile, the Topix dropped 12% in a day in early August, while the VIX hit its March 2020 highs.

While the strategy gave back some gains in early July after a very strong June, the second half of July and the month of August were positive. The reason for our portfolio's pullback early July was mainly led by our semiconductor positions. We started the year with a fairly constructive view on the sector, as the industry was coming out of a severe downturn with several structural and cyclical tailwinds, which gave us some constructive views on several parts of the value chain.

As the year progressed, there started to appear cracks in many aspects of the bull case, particularly for the wafer fab equipment players. Firstly, the expected second half cyclical recovery of the traditional semiconductor business did not materialize. The sector experienced continued weakness and inventory built in the automotive, industrial, PC & Mobile end markets. Secondly, following these first signs of cracks appearing in the sector, delays started to appear on many of the politically driven mega fab projects due to supply chain issues, staff shortages, planning delays, etc.

Furthermore, the technological issues of both Intel & Samsung (2nd & 3rd largest capex spenders) started to become more apparent, with both firms struggling with the note transition and severe technological shortcomings that led to capex cuts. Lastly, we saw a lot of the slack of demand for semiconductor equipment being picked-up by China, which accounted for close to 50% of sales for many of the large equipment companies in Q2. This level was unsustainable and driven by hording and a potentially risky customer base, due to increased political tensions and the potential for further export controls. We exited most of our semiconductor exposure in early July for these reasons.

That said, we remain excited about the prospects of artificial intelligence (AI) and we like to keep some exposure to the theme, but effectively it is a fairly narrow part of the industry and a limited number of players benefit from it, namely the GPU & Datacentre space. However, we see big dispersion between the winners and the losers, while many other parts of the sector are struggling for various reasons.

The overall book is fairly defensively positioned right now with most of our large Longs in the Software, Healthcare, Insurance and Telecommunications sectors where we find many attractive, company specific opportunities. Looking at the earnings trajectories and the performance of many of the popular European blue chips, the picture is not very encouraging and there were many pitfalls. Nestle hit a new multi-year low and is down 30% from the peak, LVMH is down 30% from last year’s highs, ASML dropped 35% since the summer, L’Oreal is down more than 20% since Q2 and Novo Nordisk had a 25% pullback since Q2 as well.

Overall, we consider the market attractive from a strong stock picking perspective with significant amount of dispersion and a great idea flow on both longs and shorts.

Carmignac Portfolio Long-Short European Equities

A high-conviction long/short approach to European equities
Discover the fund page

Carmignac Portfolio Long-Short European Equities F EUR Acc

ISIN: LU0992627298
Recommended minimum investment horizon
3 years
Risk indicator*
3/7
SFDR - Fund Classification**
Article 8

*Risk Scale from the KID (Key Information Document). Risk 1 does not mean a risk-free investment. This indicator may change over time. **Sustainable Finance Disclosure Regulation (SFDR) 2019/2088. The SFDR classification of the Funds may change over time.

Main risks of the fund

Risk associated with the Long/Short Strategy: This risk is linked to long and/or short positions designed to adjust net market exposure. The Fund may suffer high losses if its long and short positions undergo simultaneous unfavourable development in opposite directions.
Equity: The Fund may be affected by stock price variations, the scale of which is dependent on external factors, stock trading volumes or market capitalization.
Interest Rate: Interest rate risk results in a decline in the net asset value in the event of changes in interest rates.
Currency: Currency risk is linked to exposure to a currency other than the Fund’s valuation currency, either through direct investment or the use of forward financial instruments.
The Fund presents a risk of loss of capital. Please refer to the Fund’s prospectus to view the exhaustive list of risks.

Fees

ISIN: LU0992627298
Entry costs
We do not charge an entry fee. 
Exit costs
We do not charge an exit fee for this product.
Management fees and other administrative or operating costs
1,15 % of the value of your investment per year. This estimate is based on actual costs over the past year.
Performance fees
20,00 % max. of the outperformance if the performance is positive and the net asset value exceeds the high-water mark. The actual amount will vary depending on how well your investment performs. The aggregated cost estimation above includes the average over the last 5 years, or since the product creation if it is less than 5 years.
Transaction Cost
1,29 % of the value of your investment per year. This is an estimate of the costs incurred when we buy and sell the investments underlying the product. The actual amount varies depending on the quantity we buy and sell.

Performance

ISIN: LU0992627298
Carmignac Portfolio Long-Short European Equities+4,8+8,3+18,0+0,7−5,7+13,6+7,4+0,3+5,1+16,7
Carmignac Portfolio Long-Short European Equities+10,6 %+4,5 %+7,2 %

Source: Carmignac at Oct 30, 2026.
Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor). The Fund presents a risk of loss of capital.
The return may increase or decrease as a result of currency fluctuations, for the shares which are not currency-hedged.

Reference Indicator: -

Share

Marketing communication. Please refer to the KID/KIID, prospectus of the fund before making any final investment decisions. This document is intended for professional clients.

This material may not be reproduced, in whole or in part, without prior authorisation from the Management Company. This material does not constitute a subscription offer, nor does it constitute investment advice. This material is not intended to provide, and should not be relied on for, accounting, legal or tax advice. This material has been provided to you for informational purposes only and may not be relied upon by you in evaluating the merits of investing in any securities or interests referred to herein or for any other purposes. The information contained in this material may be partial information and may be modified without prior notice. They are expressed as of the date of writing and are derived from proprietary and non-proprietary sources deemed by Carmignac to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Carmignac, its officers, employees or agents.

Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor). The return may increase or decrease as a result of currency fluctuations, for the shares which are not currency-hedged.

Reference to certain securities and financial instruments is for illustrative purposes to highlight stocks that are or have been included in the portfolios of funds in the Carmignac range. This is not intended to promote direct investment in those instruments, nor does it constitute investment advice. The Management Company is not subject to prohibition on trading in these instruments prior to issuing any communication. The portfolios of Carmignac funds may change without previous notice. The reference to a ranking or prize, is no guarantee of the future results of the UCIS or the manager.

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Access to the Funds may be subject to restrictions regarding certain persons or countries. This material is not directed to any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) the material or availability of this material is prohibited. Persons in respect of whom such prohibitions apply must not access this material. Taxation depends on the situation of the individual. The Funds are not registered for retail distribution in Asia, in Japan, in North America, nor are they registered in South America. Carmignac Funds are registered in Singapore as restricted foreign scheme (for professional clients only). The Funds have not been registered under the US Securities Act of 1933. The Funds may not be offered or sold, directly or indirectly, for the benefit or on behalf of a «U.S. person», according to the definition of the US Regulation S and FATCA.
The risks, fees and ongoing charges are described in the KID (Key Information Document). The KID must be made available to the subscriber prior to subscription. The subscriber must read the KID. Investors may lose some or all their capital, as the capital in the funds are not guaranteed. The Funds present a risk of loss of capital.

The Funds’ prospectus, KIDs, NAVs and annual reports are available at www.carmignac.com/en, or upon request to the Management Carmignac Portfolio refers to the sub-funds of Carmignac Portfolio SICAV, an investment company under Luxembourg law, conforming to the UCITS Directive. The French investment funds (fonds communs de placement or FCP) are common funds in contractual form conforming to the UCITS or AIFM Directive under French law.

  • In the United Kingdom: the Funds’ respective prospectuses, KIIDs and annual reports are available at www.carmignac.com/en-gb, or upon request to the Management Company, or for the French Funds, at the offices of the acilities Agent, Carmignac UK Ltd, 2 Carlton House Terrace, London, SW1Y 5AF. This document was prepared by Carmignac Gestion, Carmignac Gestion Luxembourg or Carmignac UK Ltd. FP Carmignac ICVC (the “Company”) is an Investment Company with variable capital incorporated in England and Wales under registered number 839620 and is authorised by the FCA with effect from 4 April 2019 and launched on 15 May 2019. FundRock Partners Limited is the Authorised Corporate Director (the “ACD”) of the Company and is authorised and regulated by the FCA. Registered Office: Hamilton Centre, Rodney Way, Chelmsford, Essex, CM1 3BY, UK; Registered in England and Wales with number 4162989. Carmignac Gestion Luxembourg SA has been appointed as the Investment Manager and distributor in respect of the Company. Carmignac UK Ltd (Registered in England and Wales with number 14162894) has been appointed as a sub-Investment Manager of the Company and is authorised and regulated by the Financial Conduct Authority with FRN:984288.

  • In Switzerland: the prospectus, KIDs and annual report are available at www.carmignac.com/en-ch, or through our representative in Switzerland, CACEIS (Switzerland), S.A., Route de Signy 35, CH-1260 Nyon. The paying agent is CACEIS Bank, Montrouge, Nyon Branch / Switzerland, Route de Signy 35, 1260 Nyon.

  • In Belgium: This document is intended for professional clients. This content has not been validated by FSMA. The decision to invest in the promoted fund should take into account all its characteristics or objectives as described in its prospectus. This communication is published by Carmignac Gestion S.A., a portfolio management company approved by the Autorité des Marchés Financiers (AMF) in France, and its Luxembourg subsidiary Carmignac Gestion Luxembourg, S.A., an investment fund management company approved by the Commission de Surveillance du Secteur Financier (CSSF). “Carmignac” is a registered trademark. “Investing in your Interest” is a slogan associated with the Carmignac trademark. This document does not constitute advice on any investment or arbitrage of transferable securities or any other asset management or investment product or service. The information and opinions contained in this document do not take into account investors’ specific individual circumstances and must never be interpreted as legal, tax or investment advice. The information contained in this document may be partial and could be changed without notice. This document may not be reproduced in whole or in part without prior authorisation. The risks and fees are described in the KID (Key Information Document). The prospectus, KID, the net asset-values and the latest (semi-) annual management report may be obtained, free of charge, in French or in Dutch, from the management company (tel. +352 46 70 60 1) or by consulting its website or www.fundinfo.com. These materials may also be obtained from Caceis Belgium S.A., the financial service provider in Belgium, at the following address: avenue du port, 86c b320, B-1000 Brussels. The Fund (fonds commun de placement or FCP) is a common fund in contractual form conforming to the UCITS Directive under French law. Access to the Fund may be subject to restrictions regarding certain persons or countries. The Funds are not registered for retail distribution in Asia, in Japan, in North America, nor are they registered in South America. Carmignac Funds are registered in Singapore as restricted foreign scheme (for professional clients only). The Funds have not been registered under the US Securities Act of 1933. The Funds may not be offered or sold, directly or indirectly, for the benefit or on behalf of a «U.S. person», according to the definition of the US Regulation S and FATCA. In case of subscription to a fund subject to Article 19bis of the Belgian Income Tax Code (CIR92), the investor will have to pay, upon redemption of his or her shares, a withholding tax of 30% on the income (in the form of interest, or capital gains or losses) derived from the return on assets invested in debt claims. Distributions are subject to withholding tax of 30% without income distinction. In case of subscription in a French investment fund (fonds commun de placement or FCP), you must declare on tax form, each year, the share of the dividends (and interest, if applicable) received by the Fund. Any complaint may be referred to complaints@carmignac.com or CARMIGNAC GESTION - Compliance and Internal Controls - 24 place Vendôme Paris France or on the website www.ombudsfin.be.

The Management Company can cease promotion in your country anytime. Investors have access to a summary of their rights at section 5 entitled "summary of investor rights" on the following links: UK ; Switzerland ; France ; Luxembourg ; Sweden. Belgium (French) ; Belgium (Dutch)

For Carmignac Portfolio Long-Short European Equities: Carmignac Gestion Luxembourg SA in its capacity as the Management Company for Carmignac Portfolio, has delegated the investment management of this Sub-Fund to White Creek Capital LLP (Registered in England and Wales with number OCC447169) from 2nd May 2024. White Creek Capital LLP is authorised and regulated by the Financial Conduct Authority with FRN : 998349.

Carmignac Private Evergreen refers to the Private Evergreen sub-fund of the SICAV Carmignac S.A. SICAV – PART II UCI, registered with the Luxembourg RCS under number B285278.