Arctic Norwegian Value Creation Monthly Report November 2018
FUND COMMENTS Arc c Norwegian Value Crea on (Class B) decreased by 0.2% in November, bringing YTD return to 5.8%. Since in- cep on in August 2014, the fund has returned 66.0% compared to 42.8% for the Norwegian benchmark. The largest posi ve contributors to fund performance in November were Scatec Solar, Schibsted and Telenor. The Scatec Solar share surged as Equinor announced the acquisi on of approximately 10 percent of the shares. In addi- on to the obvious fact that Equinor at some stage might bid for the whole company, the share purchase may be seen as another vindica on of Scatec’s business model. Schibsted seemed to con nue its posi ve development and the share has been in a trading range since the September announcement of the spin-off of its interna onal, non- Nordic marketplaces. The Telenor share has performed well a er repor ng good Q3 numbers at the end of October. Telenor currently has low financial leverage, and there have been specula ons concerning how the company might use its financial flexibility. In November, the company decided not to submit a bid to become the third operator of the Philippines, ci ng the need to be in full opera onal control, which is not allowed under current foreign ownership rules. The approval of the T-Mobile and Tele2 merger could open up for in-market consolida on in Sweden and Denmark. The most nega ve contributors to fund performance in November were Aker Asa, Aker BP and Transocean. The price of Brent crude fell by more than 20% in November, taking oil & gas companies like Aker BP and rig companies like Transocean along with it. Aker was similarly affected, as its 40% stake in Aker BP is its largest asset by far. In addi on, Aker Energy’s Plan for Development for the Pecan field in Ghana was delayed from Q4’18 to Q1’19, and first oil might slip into 2022. Year to date, Lerøy Seafood, Tomra and Schibsted have been the most significant posi ve contributors to perfor- mance, while XXL, Europris and B2 Holding have been the largest detractors. NEL exited the por olio in November. We increased our holdings in Kongsberg Gruppen (par cipa on in rights is- sue), Aker BP, Transocean, Aker, DNB and SpareBank 1 Østlandet (par cipa on in private placement), while we sold part of our holding in Scatec in the abovemen oned purchase of shares by Equinor. At the end of November, the por olio was valued at 13.3 mes 12 months forward earnings and 1.7 mes book value. Corresponding figures for the Norwegian market were 14.4 and 1.9, respec vely. Oslo, December 2018 Sindre Sørbye Ole E. Dahl Tore Mengshoel Thomas Rasmussen Por olio Manager Por olio Manager Por olio Manager Analyst
ABOUT THE FUND Arc c Norwegian Value Crea on is research driven and truly index-independent UCITS fund. The investment process focus on iden fying companies which are considered to be value-crea ng over me at a reasonable price. The por olio is con- structed by bo om up stock picking. There are no constraints regarding sectors and the goal is to achieve the best possible long-term risk-adjusted return. The funds benchmark is Oslo Stock Exchange Mutual Fund Index (OSEFX).
15% 13.7 % 12.6 % 10.3 % 9.0 % 10% 8.3 % 8.7 % 5.8 % 5.6 % 5%
0% ‐0.2 % -5% ‐2.7 % Month YTD 12m 36m p.a. 60m p.a. Incep. p.a. Arctic Norwegian Value Crea tion II Class B (25/8‐14) OSEFX FUND COMPOSITION END OF MONTH
Real Estate 0.6% 10 largest positions Energy 15.0% Kongsberg Gruppen ASA 5.5 % XXL ASA 3.8 % Industrials 10.9% Schibsted ASA 5.2 % Elkem ASA 3.7 % Health Care 0.0% Telenor ASA 4.7 % Storebrand ASA 3.6 % Consumer Discretionary 4.2% Aker BP ASA 4.0 % Europris ASA 3.6 % Materials 11.1% Yara International ASA 3.8 % SpareBank 1 SR-Bank AS 3.3 % Information Technology 6.4% Financials 26.5% 5 largest overweights +/‐ 5 largest underweights +/‐ Consumer Staples 14.2% Kongsberg Gruppen 4.4 % Equinor ASA -9.0 % Telecommunication Services 4.9% Elkem ASA 3.7 % Marine Harvest -7.0 % Utilities 1.9% XXL ASA 3.3 % DNB ASA -5.2 % Europris ASA 3.2 % Orkla -4.9 % 0% 5% 10% 15% 20% 25% 30% Sbanken ASA 2.9 % Telenor -4.3 %
FUND PERFORMANCE AND RISK FIGURES —CLASS B NOK (FORMER CLASS A)
3 6 Since Month months months YTD 1 year 3 years launch Fund -0.2 % -5.9 % -3.3 % 5.8 % 9.0 % 47.0 % 66.0 % Benchmark -2.7 % -4.5 % -1.2 % 5.6 % 8.3 % 34.3 % 42.8 % Difference 2.5 % -1.4 % -2.1 % 0.2 % 0.7 % 12.8 % 23.2 % Vinx Nordic Net, NOK 0.8 % -7.7 % -2.3 % -3.3 % -3.4 % 12.4 % 50.6 % Euro Stoxx 600, EUR -1.0 % -6.2 % -5.9 % -5.6 % -4.9 % 0.8 % 17.6 % S&P 500 TR, USD 2.0 % -4.4 % 3.0 % 5.1 % 6.3 % 41.1 % 50.9 % MSCI AC World, LC 1.3 % -5.2 % -1.3 % -0.5 % 0.8 % 27.3 % 33.8 %
5 top contribut. Fund Fund Contri‐ 5 bottom contribut. Fund Fund Contri‐ year to date weight return bution year to date weight return bution Leroy Seafood Group 3.3 % 70.8 % 1.87 % Xxl Asa 3.5 % -47.4 % -2.00 % Tomra Systems Asa 2.6 % 80.4 % 1.63 % Europris Asa 3.1 % -24.5 % -0.78 % Schibsted Asa-B Shs 4.6 % 33.2 % 1.34 % B2 Holding Asa 1.7 % -32.4 % -0.77 % Austevoll Seafood As 1.1 % 66.0 % 1.30 % Elkem As 3.1 % -6.5 % -0.47 % Scatec Solar Asa 3.4 % 50.1 % 1.23 % Nordea Bank Abp 2.0 % -17.1 % -0.36 %
Standard Sharpe Tracking Information Portfolio characteristics Deviation Ratio Error Ratio Arctic Norwegian Value Creation 10.5 % 1.3 4.3 % 0.8 Benchmark 10.3 % 1.0 *) Based on 36 months performance Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD 2018 -0.75 % -0.84 % -0.69 % 6.85 % 4.70 % -0.03 % 0.80 % 2.02 % 1.70 % -7.32 % -0.19 % 5.76 % 2017 1.70 % 0.29 % -2.35 % 4.19 % 0.70 % -0.07 % 3.81 % -0.48 % 4.53 % 3.17 % -2.03 % 3.09 % 17.51 % 2016 -7.33 % 2.60 % 2.10 % 4.08 % 3.70 % -3.14 % 3.81 % 1.29 % 1.71 % 3.60 % 1.99 % 3.96 % 19.23 % 2015 4.66 % -1.15 % 1.42 % 3.48 % 0.13 % -2.25 % 1.62 % -5.13 % -1.22 % 3.68 % 4.05 % -0.76 % 8.34 % 2014 0.44 % 0.28 % -0.88 % 1.49 % 2.05 % 3.39 %
Disclaimer: Historical returns are no guarantee for future returns. Future 100.0 % returns will depend, inter alia, on market developments, the fund man‐ ager’s skill, the fund’s risk profile and subscrip on and management fees. 80.0 % The return may become nega ve as a result of nega ve price develop‐
60.0 % ments. Arc c Fund Management AS seeks to the best of its ability to ensure that all informa on given in this report is correct, however, makes reserva‐ 40.0 % ons regarding possible errors and omissions. Statements in the report reflect the por olio managers’ viewpoint at a given me, and this view‐ 20.0 % point may be changed without no ce. The report should not be perceived as an offer or recommenda on to buy or sell financial instruments. Arc c 0.0 % Fund Management AS does not assume responsibility for direct or indirect loss or expenses incurred through use or understanding of the report. -20.0 % Employees of Arc c Fund Management AS may be owners of securi es 08/14 12/14 04/15 08/15 12/15 04/16 08/16 12/16 04/17 08/17 12/17 04/18 08/18 issued by companies that are either referred to in this rapport or are part of Arctic Norwegian Value Creation Class B (Start 22.08.14) OSEFX the fund's por olio.