Sextant Grand Large Annual Report
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ANNUAL REPORT Unit A FR0010286013 December 2019 SEXTANT GRAND LARGE Sextant Grand Large’s asset value rose 1.9% in Q4, versus 2.8% for its Japanese conglomerate Toshiba, which holds over 50% of the capital. The benchmark index. In full-year 2019, the fund advanced 4.6% versus 13.6% company has a particularly interesting profile thanks to a highly recurring for the benchmark. This under-performance was mainly the result of low activity: maintenance of power plants in Japan. Moreover, this activity is exposure to equities as market valuations are close to record levels, benefiting from structural increases in construction of medium-sized power especially in the US. The fund was also handicapped by our stock-picking plants in south-east Asia. Lastly, the company has very substantial cash strategy which tends to favour European and Asian small- and mid-caps, holdings. In view of these strengths, the fund acquired an initial holding in with a penchant for value where multiples had fallen heavily relative to mid November. Shortly afterwards, Toshiba decided to delist Toshiba those of large cap growth stocks and US equities. Contrary to our Plant completely by bidding for all shares it did not already hold at 2670 expectations, the performance gap widened to record levels in 2019, as the yen – 10% above the price we paid initially. The parent company did the large caps outpaced stocks that are perceived as « growth » stories. same for each of its three listed subsidiaries, reflecting Japanese Against this backdrop, we raised the weighting of European and Asian government pressure on large groups to simplify their shareholder small- and mid-caps in the fund, and we will continue to do so in 2020. structures by buying out and delisting their listed subsidiaries. Although we were not surprised by this turn of events, we regret that the bid price did not, Asset allocation in our view, reflect Toshiba Plant’s real value. Aimia is an operator of At the end of Q4, net exposure to equities was down to 23,8% due to the loyalty programmes. Its biggest scheme was Air Canada’s Aeroplan, but the strong rally by main indices. This exposure breaks down into gross airlines opted not to renew the partnership in 2017 and to take the exposure of 29,6% and hedging at 5,8%. In line with our quantitative model programme back from Aimia. The news caused the share price to plunge we maintain our defensive bias as equity markets are trading at high valuations -especially in the US where insider selling set new records (close 80% in a few days. We liked Aimia’s strong balance sheet, largely to those of 2000) in 2019. The rest of the fund comprises bond (17,3%) and comprising cash and government bonds, as well as its stake in PLM, broadly defined liquidity (53.1%). This generous cushion of cash and near- Aeromexico’s loyalty programme. PLM is growing, highly profitable and cash gives us plenty of leeway to take advantage of a possible bout of pays a regular dividend to Aimia. Apart from on going changes to the market weakness. board, and probably at management level in the coming months, the company’s main appeal is the rational nature of its capital allocation. Under pressure from shareholders, Aimia has used its substantial cash holdings Equities to acquire nearly 40% of outstanding shares in less than one year, at a Strikingly, the main contributors in 2019 were growth stocks like Alibaba, price far below their asset value. Lastly, Rocket Internet’s share price rose Indutrade and Delivery Hero, which we bought at lows that proved very slowly in 2019, despite a still-high discount to revalued NAV and a good performance by its main listed investments. The founder, Oliver Samwer, temporary. Indutrade, a Swedish conglomerate that shelters nearly 200 raised his stake in the company significantly in late 2019. industrial companies and operates mainly in the Nordic countries, is fully autonomous and positioned in fairly recurring market segments. We Bonds and other asset classes acquired a shareholding in September following a slow down in Sweden’s industrial sector. The lower share price looked a good entry point, given the We continue to avoid the rate risk as much as possible, as spreads are quality of the group’s policy of systematic acquisitions. Following a good close to their all-time lows. The current portfolio offers a yield net of forex run, we divested the holding towards the year-end at a price that was close covering of 5.9% for sensitivity of 2.3, which we consider satisfactory. Our to our target. Delivery Hero, the leader for home delivery of meals in many main bond holding, the Casino 3.992% Perp, was highly volatile in 2019 as developing markets and in several European countries, saw its share price main shareholder, Rallye, was placed under creditor protection in May. Our rally strongly in late 2019 thanks to an acceleration in organic growth and investment case was (and still is) inspired by on Casino’s asset base, the acquisition of its main competitor in South Korea. The latter is Delivery which covers the cost of debt according to our analysis. The market Hero’s main market and the integration of Woowa should limit marketing perception, which confuses the risk attached to Rallye debt (which we have costs and raise profitability. On the other hand, Iliad, Toshiba Plant, Aimia never owned), with that of Casino has allowed us to increase our holding at and Rocket Internet made negative or very minor contributions in 2019, a low price, as the situations and the destinies of the two groups look even though management and majority shareholders bought shares fundamentally different to us. Although the improvement in Casino’s massively in Q4 with a view to delistings. Iliad was one of the largest operating performance and share price will certainly not be linear, our negative contributors last year, due to still-complicated trends in France in analysis suggests that they are underpinned by unique assets which cannot H1 coupled with rising losses in Italy caused by a major recruitment drive. be replicated, a situation that is rare in today’s bond markets. In an However, Q3 brought an improvement brought a recovery in both fixed and environment of negative short-term rates, some of the fund’s cash has been mobile in France, as well as impressive dynamism in Italy. Following a fall invested in money markets to fund corporate T-bills with which we are in the share price, the company offered to buy back 40% of the float at €120 familiar. This allows us to obtain a yield close to zero without taking per share, and then carried out a capital increase for the same amount, fully unacceptable risks. under written by Xavier Niel. Toshiba Plant is a listed subsidiary of Performances Sextant Grand Large (A) 50% MSCI AC World + 50% EONIA 1 month 1.2% 0.8% 3 months 1.9% 2.8% 6 months 2.8% 4.9% 1 year 4.6% 13.6% 3 years 4.0% 19.9% 5 years 31.4% 32.4% 10 years 132.9% 53.4% 15 years 229.5% 88.6% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Sextant Grand Large (A) 61.7% 24.1% ‑8.4% 15.2% 21.0% 11.7% 13.6% 11.2% 3.9% ‑4.3% 4.6% 50% MSCI AC World + 50% EONIA 14.3% 0.7% ‑6.1% 9.7% 10.4% 1.2% 5.9% 4.2% 5.6% 0.0% 13.6% Since 2 May 2018, for reflecting better the fund’s international dimension, we have decided to change the benchmark index : 50% MSCI World +50% Eonia (previously 50% MSCI CAC 40 +50% Eonia). Amiral Gestion - 103 rue de Grenelle ‑ 75007 Paris - T. +33 (0)1 47 20 78 18 - F. +33 (0)1 40 74 35 64 - www.amiralgestion.com Asset management company authorised by the Financial Markets Authority under the number GP‑04000038 / Insurance broker company registered with ORIAS under the number 12065490 / Simplified joint-stock company with capital of €629 983 - RCS Paris 445 224 090 - VAT: FR 33 445 224 090 ANNUAL REPORT SEXTANT GRAND LARGE Exposition Indicators Distribution of holdings by sector Geographical distribution of holdings Fund : 2.9% 3 years volatility Benchmark : 6.2% Number of lines 96 Average cap. of equities 26 260 M€ Median cap. of equities 1 879 M€ Bonds Indicators Fixed income Total part assets Gross yield 5.9% 1.0% Yield after cost of 5.5% 0.9% forex hedging Spread (basis point) 575 99 Residual duration 2.5 0.4 (years) Interest-rate sensitivity 2.3 0.4 Main holdings Name Sector Country Net asset % Contrib. to quarterly performance Iliad Telecommunications France 2.2% 32 bps Berkshire A Holding United States 2.2% 20 bps Rocket Internet Media / Internet Germany 2.1% ‑14 bps Toshiba Plant Industry Japan 1.6% 0 bps Casino TSSDI 2049 Retail France 1.3% ‑15 bps Bonds Allocations Main contributions to performance Bonds 17.2% Name Contrib. Name Contrib. o/w sovereign 0.0% Delivery Hero 60 bps Casino TSSDI 2049 ‑15 bps o/w corporate 9.4% Clear media 36 bps Rocket Internet ‑14 bps o/w financials 5.3% Iliad 32 bps TripAdvisor ‑8 bps o/w convertibles 2.4% Alibaba ADR 31 bps Mail.RU ADR ‑5 bps HYVE group 24 bps Groupe Guillin ‑3 bps Main characteristics Legal form UCITS / French mutual fund Fund : 11/07/2003 Launch date Share category Unit A all subscribers Unit : 11/07/2003 ISIN code FR0010286013 Recommended investment Over 5 years Bloomberg code AMSEGLA FP duration AMF classification N/A Centralis.-Settlem.