Comment November 2021
In view of new lockdown fears in Europe, small-cap Swiss equities experienced a noticeable setback in November. Once again, almost all equities were hit by a rapid negative spiral, including value stocks. However, the highly valued growth stocks, which are not in the fund portfolio, came under disproportionate pressure.
DKSH, Also, BKW, Plazza, Groupe Minoteries and Holdigaz supported the fund's performance. The share price performance of Jungfraubahn, Cosmo, MCH Group, IVF Hartmann and Vifor Pharma was negative. However, the new CEO Abbas Hussain of Vifor, which specializes in iron deficiency, nephrology and cardiovascular diseases, made an excellent impression at the CS Conference on Swiss Equities. In addition to the clear strategic statements, we liked the cost focus. In our opinion, there is a high chance that together with the expected news, the momentum in the stock will turn back to the positive side. The potential approval of Ferinject in China or the commercialisation of Rayaldee in Europe and Korsuva in the US may be triggers for such a turnaround. It is also essential for Vifor that the iron franchise remains on the road to recovery after the pandemic-related slump. The strengthening of the pipeline through the recent acquisitions of Sanifit Therapeutics and Inositec are of secondary importance for the investment case today. However, the broadening of the pipeline opens up new opportunities and is to be welcomed. IVF Hartmann had to adjust the forecast for 2021 repeatedly. Higher procurement and logistics costs and an oversaturation of the supply of protective goods continue to weigh. Nevertheless, operating profit is expected to be in line with the first half of the year. With conservative assumptions, the valuation is currently at an extremely attractive point and offers a high upside potential in case of an operational improvement. We are not satisfied with the fund's performance so far this year. We are consistently pushing ahead the broader positioning of the portfolio towards solid Swiss companies with above-average balance sheet quality. Attractive opportunities for this are sufficiently available on the Swiss stock market.