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What kind of investment are we looking for in European equities?
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Within our European Funds, we look for strong business models to invest in, companies with strong fundamentals. We will not go into our investment process in detail, but we will try to illustrate it by running through what we think are some strong investment cases, highlighting two interesting stock examples. As believers in high-conviction investment management, we certainly do not follow reference indicators and we are really looking to invest to win, rather than invest not to lose. This is also supported by a very strong risk management background here at Carmignac.
We are really looking to invest to win, rather than invest not to lose
One name that we have recently added to our European portfolios is ASOS, a leading online apparel retailer in Europe. From a big-picture point of view, it operates in a huge addressable market, the global apparel market, which is still underpenetrated on the online side. In addition, the company’s products are highly appreciated by clients, there is a huge assortment to choose from, their delivery times are fast, and the shopping experience is very qualitative. ASOS also has a strong management team and a great track record of development, starting in the UK, rolling out across Europe, and now entering the United States. Finally, in terms of numbers, the economics work1.
Puma is another strong conviction. Although it is the number-three global sports brand and has very high brand recognition globally, it only has a 2% market share, far behind Nike and Adidas. After being a high-flying company in the early 2000s, Puma has gone through a difficult period, notably due to a few unsuccessful management changes, so the margin went down to low single-digits and their growth in between was negative. However, in the last two and a half years, Puma has invested a lot into the brand and the performance heritage, and that shift has borne fruit: last quarter, they reported 22% organic growth with increasing margins. The brand is back to its origins on the performance side, and is now entering the US market for basketball products2.
Learn more about our European Fund range:
• Carmignac Portfolio Grande Europe
• Carmignac Euro-Entrepreneurs and Carmignac Portfolio Euro-Entrepreneurs
• Carmignac Long-Short European Equities and Carmignac Portfolio Long-Short European Equities
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(1) Asos Investor Relations, 2018. (2) Business Insider, Wedbush Securities Estimates, 2018; Euromonitor, 2017, Puma Investors Relations, 2018.
Source: Carmignac, June 2018. This article is intended for professional clients. This article may not be reproduced, in whole or in part, without prior authorisation from the management company. This article does not constitute a subscription offer, nor does it constitute investment advice. The information contained in this article may be partial information, and may be modified without prior notice. Past performance is not necessarily indicative of future performance. Access to the Funds may be subject to restrictions with regard to certain persons or countries. The Funds are not registered in North America, in South America, in Asia nor are they registered in Japan. The Funds are registered in Singapore as restricted foreign scheme (for professional clients only). The Funds have not been registered under the US Securities Act of 1933. The Funds may not be offered or sold, directly or indirectly, for the benefit or on behalf of a "U.S. person", according to the definition of the US Regulation S and/or FATCA. The Funds present a risk of loss of capital. The risks and fees are described in the KIID (Key Investor Information Document). The Funds’ prospectuses, KIIDs and annual reports are available at www.carmignac.com, or upon request to the Management Company. The KIID must be made available to the subscriber prior to subscription. In Switzerland, the Funds’ respective prospectuses, KIIDs and annual reports are available at www.carmignac.ch, or through our representative in Switzerland, CACEIS (Switzerland) SA, Route de Signy 35, CH-1260 Nyon. In the United Kingdom, the Funds’ respective prospectuses, KIIDs and annual reports are available at www.carmignac.co.uk, or upon request to the Management Company, or for the French Funds, at the offices of the Facilities Agent at BNP PARIBAS SECURITIES SERVICES, operating through its branch in London: 55 Moorgate, London EC2R. This article was prepared by Carmignac Gestion and/or Carmignac Gestion Luxembourg and is being distributed in the UK by Carmignac Gestion Luxembourg UK Branch (Registered in England and Wales with number FC031103, CSSF agreement of 10/06/2013). Reference to certain securities and financial instruments is for illustrative purposes to highlight stocks that are or have been included in the portfolios of funds in the Carmignac range. This is not intended to promote direct investment in those instruments, nor does it constitute investment advice. The Management Company is not subject to prohibition on trading in these instruments prior to issuing any communication. The portfolios of Carmignac funds may change without previous notice.