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The net exposure of the strategy stayed stable throughout the month in the 15-25% range, as we remain constructive on both the Long and Short sides.
We keep strong convictions on the Long side in European companies excelling globally and benefiting from local monopolies.
These include industries such as luxury goods, specialty engineering, ERP software, specialty chemicals, medical technology, aerospace and defense, and classifieds.
We believe Europe presents for the first time in a long time a very attractive entry point, with a risk/reward skewed to the upside thanks to several factors we discuss in our latest quarterly letter.
Germany has removed the fiscal drag which has weighted on Europe for more than a decade and the upcoming defense and infrastructure historic investment plan will have a profound impact on the overall region.
On the short side, we continue to find many new names in the Consumer and Industrials spaces with poor balance sheets and deteriorating fundamentals, bringing tightened margins and profit warnings.
Europe EUR | 37.0 % |
Others | 12.8 % |
North America | 11.0 % |
Europe ex-EUR | -3.0 % |
Index Derivatives | -24.9 % |
We strive to build a high-conviction portfolio of long and short positions, based on a thorough fundamental company analysis to identify the best opportunities in Europe.
Market environment
• The Iran-Israel crisis in mid-June caused a brief dip in global indices, but markets quickly recovered following news of a ceasefire later in the month.
• Germany’s announcement of a €46 billion tax relief package boosted the DAX. The eurozone showed signs of economic recovery, with improving business sentiment and consumer confidence.
• However, significant risks remain, including unresolved tariffs, economic slowdown fears and fiscal challenges.