Monthly report December 2020

The return on the broad European index (Stoxx Europe 600) was -2% in 2020. The Dutch and German stock markets recorded pluses of 6% and 4% respectively, while there were minuses in England (-12%) and France (-5%).

The AEF's average long weighting was 32% in 2020. Both beta and alpha contributed positively to the annual return.

The best performing long positions were Datwyler (medical applications), Oerlikon (industrial) and D'Ieteren (auto glass replacement and auto distribution). All long positions contributed to earnings. The short positions (a short position is a downside position that allows investors to profit from price declines. Antaurus goes short by borrowing shares to then sell them immediately. This is done with the intention of buying back the same shares cheaper in the future and then also delivering them back to the lending party) contributed positively to the returns achieved on balance. in the medical and technology sector made a negative contribution. Their business activities benefited from the social impact of the coronavirus.

Datwyler increased including dividends by 40% by 2020. Investors got excited about the company's transition from conglomerate to specialist in rubber seals. This segment has strong growth prospects, especially with its solutions for the medical industry. Moreover, Datwyler announced that the contract for Nespresso cups has been extended by as much as ten years.

Oerlikon's share price rose 66% since purchase by the AEF. AEF made the investment in Oerlikon at the time of the substantial share price drop in March. At the time, investors were fearful of a very hard fall in profitability in Oerlikon's "Surface Solutions" division, an activity through which Oerlikon is a leading player in surface treatments. Although volumes in this division did indeed fall sharply, it was clear to us early on that management was taking advantage of the crisis to cut costs substantially. We expect this strategic decision to offer potential for a strong recovery of profit margins in coming quarters. A first impetus to this was visible in the third quarter results. The other division, "Manmade Fibers," had a strong year. This division supplies production lines for manufacturing synthetic fibers. This market is a (quasi) duopoly with Oerlikon holding almost half of the market. Oerlikon is fully booked here for the next 2.5 years.

The return on D'Ieteren shares in 2020 was 10% (including dividends). D'Ieteren's most valuable activity is its auto glass replacement business, known for the Carglass brand. Despite declining volumes due to less driving, the profitability of this activity increased sharply in 2020. Indeed, D'Ieteren was able to increase its prices, helped by a larger market share of more luxurious cars with more expensive auto glass. The trend of more and more cars being equipped with the Advanced Driver Assistant System (ADAS), smart driving assistance systems built into the windshield, helps in this regard. Another dynamic that contributes positively is the fact that D'Ieteren increasingly manages to sell customers complementary products such as windshield wipers and disinfectant hand gel. Finally, the company is succeeding in significantly reducing costs. As a result of these favorable developments, D'Ieteren announced in November that its results were much better than expected by the market. Since this announcement and following positive analyst reports as a result, D'Ieteren's share price rose 30% until the end of December.