Monthly Report December 2011
Stock markets Mixed Performance Underperformance Investments Invested
Outlook Positive
MarketsIn contrast to politicians, financial markets bluntly express their opinion. Market participants continuously display their evaluation of the effects of political decisions on the risks of securities and currencies. Markets do their job at least as well as the rating agencies. The level of risk premium is a valuable indicator for the financial and political situation of a country or a corporation. A dried up interbank market thus gives us more information on the status quo of the banking system than any stress test conducted by regulatory authorities. Contrary to voters, who are usually prompted about their opinion on economic policy only every four years, investors continuously express their opinions in the financial markets. The higher risk premiums are a warning signal, that the muddling along has to stop. Those warning signals will become stronger if politicians continue to waste time by discussing about an expansion of the EFSF or the issuing of Eurobonds,
Share price performance as of December 31, 2011Net Asset Value CHF 17.10 | December 2011 1.00% | YTD -8.80% | 3 years 51.33% | Since inception 3.03% p.a. |
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instead of addressing the roots of the problem. Politicians will have to
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understand that the European model of the welfare state, which is based on the principle of indiscriminate distribution, has failed. The Swiss economic policy should make sure that going forward we will continue to avoid falling prey to this European delusion.
Performance
In a volatile environment, shares of Formulafirst Ltd. gained
1.0%, while the MSCI Europe increased by 2.04%. The resulting
underperformance of Formulafirst Ltd. against the MSCI Europe
in December 2011 is
1.04%-points. Since the beginning of the year the
outperformance amounts to 2.14%-points.
Formulafirst (CHF) MSCI Europe Index (EUR) SO Index (EUR)
Breakdown by sectors Investments
Based on incoming orders from clients and their inventory
management, Beiersdorf does not see any slowdown of business
yet. The internal adjustments are 90% completed. In 2012
fixed costs will be significantly reduced. In 2012, assuming
the economy stays stable, an EBIT margin similar to that of
2010 could be achieved. The generics business of Fresenius SE
should perform well until 2015/16. For Asia, the company even
expects a mid-double-digit growth, as there is a vast demand
for "Kabi" products. At the plant in Vietnam, the capacities
had to be doubled. Helios will continue trying to increase
the number of cases per hospital. The staff costs in relation
to turnover for public hospitals are at 70-80%, whereas at
Helios they are only
55-60%! The growth drivers for Kaba are urbanization, growing
demand
Materials Consumer discretionaries Industrials
Consumer staples Healthcare Cash
1.2%
14.3%
20.8%
19.6%
19.6%
24.5%
for security, technological innovations and increasing income, especially in emerging markets. Through acquisitions, the company will expand its installed base, in order to further stabilize the course of business. Krones does not see any signs of a slowdown in business for the next months. After the rapid growth period of 2010 and 2011, in which the company grew by a total of approximately 30%, Krones is expecting slower growth for 2012, as the company is planning to reject less interesting orders to give a signal towards price appreciation for the whole industry.
Country BreakdownDeutschland 58.4% Schweiz 41.6%
Oesterreich
OutlookStock markets continue to be heavily affected by the Eurozone debt crisis. Till date, the policy makers have only come up with patchwork solutions to which the markets promptly reacted with downward moves. As soon as the politicians will realize that they are up to their neck in difficulties, we expect the ECB to flood the market with liquidity. This will give the Eurozone members some time to create a viable solution for their problems that could satisfy the markets. For this period we expect very positive movements in the financial markets.
The largest positionsRational Beiersdorf Fresenius SE Sika Straumann
Forbo
8.0%
8.0%
7.1%
6.3%
6.3%
9.4%
This information is not an offer to purchase or subscribe to shares in Formulafirst and may not be circulated in any jurisdictions where it violates any applicable laws or regulations, including and without restric- tion in the United States of America. While the information given is considered reliable, Formulafirst, respectively 2trade group ltd. don't guarantee that it is complete or accurate. Opinions and estimates may be amended without notice. Past performance is not an indication of future performance.
Formulafirst - investing in "smart owners" Formulafirst: the concept Smart Owners consistently outperform the market (indexed) Investment ideaExperience shows that owners generally invest more successfully than em- ployees. The Investment company Formulafirst focuses on Smart Owners as they are known. The investment universe consists of owner-managed companies in Central Europe (D-A-CH).
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Owner-managed companies and those that are controlled by owner-ori- ented groups of investors are generally distinguished by their consistent strategy of long-term and sustainable growth. Since owner-managers have
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a substantial share of their wealth and, in most cases, of their working time invested in the company, their strategic business orientation includes goals such as maintaining the company's independence, a smooth transfer to the next generation as well as safeguarding and growing the company's assets. The long-term perspective, in some cases spanning several genera- tions, is a major reason why these companies are more focused on their long-term strategic positioning rather than on the short-term maximization of returns.
Investment criteria
For owner-managed companies to be included in the investment
universe of Formulafirst, the following conditions must be
met: a) headquarters in Central Europe (Switzerland, Austria
and Germany), b) listed on an regular stock exchange, c)
minimum market capitalization of EUR 100 million, d) managed
by owner-managers holding at least 15% but no more than 75%
of voting rights. The universe of owner-managed companies
from which the best stocks are picked by Formulafirst for
investment includes the 50 such companies with the highest
market capitalization.
The companies selected form the basis for Formulafirst's
investments.
Made up of the 50 owner-managed companies the investment
universe is screened by a thorough fundamental analysis in a
primarily "bottom-up" approach and the most promising stocks
are identified.
Formulafirst invests in equities convertible instruments,
options (manag- ing existing positions), futures (to hedge
currency and market risks) and shares of holding companies
and funds. Investment exposure is 100% of company assets. The
investment horizon is long-term and the selection of
portfolio positions is limited to a reasonable number. The
size of individual investments may not exceed 10% of the
portfolio when purchased (cost). The investment style is
primarily based on the "value" approach and invest- ments are
made in an anti-cyclical manner. The maximum sector weighting
in the portfolio should not exceed 30%.
Smart Owners Index (EUR) MSCI Europe Index (EUR)
Company details Company: Formulafirst Ltd., British Virgin Islands Board of Directors: Derek P. Baudains, Kay Reddy, Markus Gresch Investment manager: 2trade group ltd., Zug Management team: Sammy Matter, Martin Treffer, Daniel Biedermann Auditors: PricewaterhouseCoopers, Zürich Corporate structure: Public limited company Inception: 18.12.02 Type of stock: bearer shares Shares outstanding: 1,625,435 Market capitalization: CHF 28 mn Listing: Swiss Exchange SIX Fees: Management fee of 1.5% p.a., Performance fee 20% above 3% p.a., current hurdle at CHF 24.67 Security number: 146 29 83 Reuters: FFI.S Bloomberg: FFI SW Equity, FFI SW Equity NAV Net asset value: Website daily, Wednesday/Saturday in FuW (Finanz und Wirtschaft) Address: 2trade group ltd.Baarerstrasse 2, CH-6301 Zug
Investor relations: Dynamics Group Ltd.
Alexandre Müller
Tel.: +41 43 268 32 32
Internet: www.formulafirst.ch
E-mail: info@formulafirst.ch
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Monats-News Dezember 2011 Englisch |