VAM Funds (Lux) Commentaries

February 2019 (click to download)

VAM US Micro Cap Growth Fund

The VAM Funds (Lux) – US Micro Cap Growth Fund performance benefited from holdings in the health care and information technology sectors. Holdings in the communications services and consumer discretionary sectors detracted from relative returns. At month end, the Fund was overweight the information technology sector and underweight the health care sector.

 

The holding that contributed the most to the Fund’s return during the month was Tandem Diabetes Care Inc (ticker: TNDM). The company designs, develops and commercialises products for people with insulin-dependent diabetes. Its share price rose after the company reported blowout fourth quarter results. Both revenue and margins came in higher-than-expectations. Fourth quarter gross margin of 54.5% came in ~420bp above consensus. 2019 revenue increased 39-47% year over year to $255-270MM.

 

The holding that detracted the most from the Fund’s return during the month was QuinStreet, Inc. (ticker: QNST). QuinStreet, Inc. is an online performance marketing and media company. Its share price fell after reporting second quarter results. Guidance was reduced due to weakness in mortgage refinance associated with a spike in interest rates along with a moderated outlook for its education segment due to its largest customer restructuring. As a result, the Manager reduced its position in the portfolio.

VAM US Small Cap Growth Fund

The VAM Funds (Lux) – US Small Cap Growth Fund performance was aided by holdings in the health care and information technology sectors. Holdings in the communication services and financials sectors detracted from relative returns. At month end, the Fund was overweight the consumer discretionary sector and underweight the industrials sector.

 

The holding that contributed the most to the Fund’s return during the month was Tandem Diabetes Care Inc (ticker: TNDM). The company designs, develops and commercialises products for people with insulin-dependent diabetes. Its share price rose after the company reported blowout fourth quarter results. Both revenue and margins came in higher-than-expectations. Fourth quarter gross margin of 54.5% came in ~420bp above consensus. 2019 revenue increased 39-47% year over year to $255-270MM.

 

The holding that detracted the most from the Fund’s return during the month was QuinStreet, Inc. (ticker: QNST). QuinStreet, Inc. is an online performance marketing and media company. Its share price fell after reporting second quarter results. Guidance was reduced due to weakness in mortgage refinance associated with a spike in interest rates and along with a moderated outlook for its education segment due to its largest customer restructuring. As a result, the Manager reduced its position in the portfolio.

VAM US Mid Cap Growth Fund

The VAM Funds (Lux) – US Mid Cap Growth Fund performance benefited from holdings in the information technology and consumer discretionary sectors. Holdings in the consumer industrials and financials sectors detracted from relative returns. At month end, the Fund was overweight the consumer discretionary sector and underweight the industrials sector.

 

The holding that contributed the most to the Fund’s return during the month was Array BioPharma Inc (ticker: ARRY). The biopharmaceutical company researches, develops and commercialises targeted small molecule drugs for the treatment of cancer and other high-burden diseases. Its share price increased after releasing its fourth quarter 2019 results. The results were better than expected with quarter revenue growing 45% year over year to $82.5 million, much higher than the $52.4 million Street expectations. The company also provided an update for the Phase 3 clinical trial of a metastatic colorectal cancer drug combination. The trial resulted in overall survival of 15.3 months.

 

The holding that detracted the most from the Fund’s return during the month was Inogen, Inc. (ticker: INGN). The medical equipment business produces portable oxygen concentrators for patients with chronic respiratory conditions. Its share price fell after the company announces its fourth quarter results. The company lowered its expectations for net income compared with its initial guidance. Management expects net income between $40-44 million, less than the $48-52 million initial expectation. However, management expects strong revenue and operating income growth in the next year. The Manager continues to hold this name in the portfolio.

VAM US Large Cap Growth Fund

The VAM Funds (Lux) – US Large Cap Growth Fund performance benefited from holdings in the financials and information technology sectors. Holdings in health care and energy sectors detracted from relative returns. At month end, the Fund was overweight the information technology sector and underweight the communication services.

 

The holding that contributed the most to the Fund’s return during the month was Microsoft Corporation (ticker: MSFT). The company develops software, services, devices and solutions. Its share price increased after an analyst added the stock to his “Best Ideas” list, mentioning the company’s expanding future in the cloud computing field. The shares continued to increase when the company revealed its next generation augmented-reality headsets.

 

The holding that detracted the most from the Fund’s return during the month was UnitedHealth Group Incorporated (ticker: UNH). The company specialises in health care coverage, software and data consultancy services. Its share price fell to no material events. The 2019 EPS guidance of $14.40-$14.70, which is the midpoint, is a 155% increase from 2014. The stock trades at less than 18x the midpoint of FY19 EPS guidance. The Manager continues to hold this name in the portfolio.

VAM Emerging Markets Growth Fund

The VAM Funds (Lux) – Emerging Markets Growth Fund performance was aided by holdings in the consumer discretionary and communication services sectors, as well as in Hong Kong and China. Exposures to consumer staples and information technology, as well as in India and Taiwan, detracted from relative returns. As of month end, the Fund was overweight Indonesia and underweight South Korea.

 

The holding that contributed the most to the Fund’s return during the month was Alibaba Group Holding Ltd. (ticker: BABA). The China-based company provides online and mobile marketplaces in retail and the wholesale trade. Its share price grew after the company announced several of its cloud computing products would be entering the international market. Previously, the products were only available in mainland China.

 

The holding that detracted the most from the Fund’s return during the month was FirstRand Limited (ticker: FSR- ZA). Its share price fell to no material events. The company is following the overall growth in South Africa, which has been trending down. In general, credit and earnings growth for many banks has slowed down. The Manager continues to hold this name in the portfolio.

VAM World Growth Fund

The VAM Funds (Lux) – World Growth Fund performance was aided by exposures in the consumer discretionary and communication services sectors, as well as in the United States and Japan. Exposures in industrials and financials, as well as in Brazil and Sweden, detracted from relative returns. As of month end, the Fund was overweight Brazil and underweight the United States.

 

The holding that contributed the most to the Fund’s return during the month was Roku Inc (ticker: ROKU). The company is a television streaming platform. Its share price rose after the announcement of new senior vice president and general manager in charge of account acquisition, Mustafa Ozgen. As the former CEO of two companies which were sold to a notable electronics heavyweight, Ozgen has a proven strong electronics background. The company also reported better-than-expected Q4 earnings and revenue results. The revenues increased by 45% and its gross profit increased by 66%.

 

The holding that detracted the most from the Fund’s return during the month was Inogen, Inc. (ticker: INGN). The medical equipment business produces portable oxygen concentrators for patients with chronic respiratory conditions. Its share price fell after the company announces its fourth quarter results. The company lowered its expectations for net income compared with its initial guidance. Management expects net income between $40-44 million, less than the $48-52 million initial expectation. However, management expects strong revenue and operating income growth in the next year. The Manager continues to hold this name in the portfolio.

VAM International Real Estate Equity Fund

The VAM Funds (Lux) – International Real Estate Equity Fund performance was aided by exposures in the United Kingdom and Australia, while exposures in Brazil and Germany detracted from relative returns. As of month end, the Fund was overweight Germany and Brazil, and underweight Japan and China.

 

The holding that contributed the most to the Fund’s return during the month was Goodman Group (ticker: GMG–AU). The Australian-based company owns, develops, and manages industrial and commercial properties. Its share price rose after the company reported strong operating results. The share price grew over 3% to $12.39. The profit increased 10.4% to $465 million. The company upheld its distribution guidance, but raised its full year earnings per share guidance to 51.1 cents.

 

The holding that detracted the most from the Fund’s return during the month was Unibail-Rodamco-Westfield (ticker: URW-NL). The Netherlands-based company owns, develops, and manages retail shopping centres and airports. Its share price fell after reporting disappointing FY19 guidance results. The decision to use a deleveraging strategy, in order to optimise returns, resulted in guidance coming in 13% below consensus. The Manager continues to hold this name in the portfolio.

VAM International Opportunities Fund

The VAM Funds (Lux) – International Opportunities Fund performance was aided by holdings in the industrials and communication services sectors, as well as in the United Kingdom and Brazil. Exposures to the energy and financials sectors, as well as in Germany and Australia, detracted from relative returns. As of month end, the Fund was overweight Canada and underweight Japan.

 

The holding that contributed the most to the Fund’s return during the month was CyberArk Software Ltd. (ticker: CYBR-US). The Israel-based company specialises in the development and sales of cybersecurity software solutions. Its share price rose after the company announced strong fourth quarter results. This was the highest growth in eleven quarters. The better-than-expected results also garnered better-than-expected revenue guidance.

 

The holding that detracted the most from the Fund’s return during the month was Elekta AB (ticker: EKTA.B-SE). The Swedish company provides clinical solutions for the treatment of cancer and brain disorders. Its share price fell due to disappointing results for the third quarter. The company missed its third quarter earnings expectations. Orders and sales came in above consensus, however, EBITA missed consensus by 17%. The company believes this was due to adverse project mix and pricing. The Manager continues to hold this name in the portfolio.

Sources: Driehaus Capital Management LLC, FactSet Research Systems, Inc., Reuters and Bloomberg.

 

Featured securities were the top contributor to or detractor from return and were held by the Fund at some point during the month of February 2019. The performance numbers for the Fund are provided by VAM Funds (Lux). The performance discussed above represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance quoted.

 

The information presented is intended for the sole and exclusive use of VAM Funds and contains confidential information that should only be relied on by the intended recipient.

 

Disclaimer

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