VAM Funds (Lux) Commentaries
July 2024 (click here to download)
VAM US Micro Cap Growth Fund*
The Fund’s holdings assigned to the communication services and financials sectors were the largest source of positive relative returns. At month end, the Fund was underweight the information technology and health care sectors, and overweight the industrials and consumer discretionary sectors.
The holding that detracted the most from the Fund’s relative returns during the month was Montrose Environmental Group Inc. (Ticker: MEG-US). Montrose Environmental Group, Inc. provides a diverse range of environmental services to the private and public sector across their life cycle needs. MEG is expected to benefit from increased regulation of PFAS in water sources. In July, increased odds of a Trump victory in the November elections and a ruling by the Supreme Court in the Chevron deference doctrine increased uncertainty as to the timelines of any PFAS regulation implementation. As a result, MEG’s stock sold off and was a top detractor.
The holding that contributed the most to the Fund’s relative returns during the month was Crinetics Pharmaceuticals Inc. (Ticker: CRNX-US). Crinetics Pharmaceuticals, Inc. is a clinical stage biopharmaceutical company developing products to treat endocrine disorders. In July, a CRNX subsidiary (Radionetics) announced strategic financing with a buy-out option with a large pharmaceutical partner. This financing raised the profile of the value of CRNX’s stake in its subsidiary, potentially unleashing incremental investor demand.
VAM US Small Cap Growth Fund
The Fund’s holdings assigned to the communication services and financials sectors were the largest source of positive relative returns. At month end, the Fund was underweight the health care and information technology sectors, and overweight the materials and industrials sectors.
The holding that detracted the most from the Fund’s relative returns during the month was Camtek Ltd. (Ticker: CAMT-US). Camtek Ltd. engages in the business of developing and manufacturing high-end inspection and metrology equipment for the semiconductor industry. In July, CAMT was a detractor, as its valuation multiples depreciated along with the multiples of all technology companies in the AI infrastructure ecosystem driven by market concerns about the sustainability of Hyperscaler capital expenditure trends in 2025. The Manager reduced the weighting in the Fund to account for technical deterioration in the stock, peers, and the industry group.
The holding that the contributed most to the Fund’s relative returns during the month was Crinetics Pharmaceuticals Inc. (Ticker: CRNX-US). Crinetics Pharmaceuticals, Inc. is a clinical stage biopharmaceutical company developing products to treat endocrine disorders. In July, a CRNX subsidiary (Radionetics) announced strategic financing with a buy-out option with a large pharmaceutical partner. This financing raised the profile of the value of CRNX’s stake in its subsidiary, potentially unleashing incremental investor demand.
VAM US Mid Cap Growth Fund
The Fund’s holdings assigned to the utilities sector were the largest source of positive relative returns. At month end, the Fund was underweight the health care and information technology sectors, and overweight the industrials and consumer staples sectors.
The holding that detracted the most from the Fund’s relative returns during the month was Camtek Ltd. (Ticker: CAMT-US). Camtek Ltd. engages in the business of developing and manufacturing high-end inspection and metrology equipment for the semiconductor industry. In July, CAMT was a detractor as its valuation multiples depreciated along with the multiples of all technology companies in the AI infrastructure ecosystem driven by market concerns about the sustainability of Hyperscaler capital expenditure trends in 2025. The Manager reduced the weighting in the Fund to account for technical deterioration in the stock, peers, and the industry group.
The holding that contributed the most to the Fund’s relative returns during the month was Crinetics Pharmaceuticals Inc. (Ticker: CRNX-US). Crinetics Pharmaceuticals, Inc. is a clinical stage biopharmaceutical company developing products to treat endocrine disorders. In July, a CRNX subsidiary (Radionetics) announced strategic financing with a buy-out option with a large pharmaceutical partner. This financing raised the profile of the value of CRNX’s stake in its subsidiary, potentially unleashing incremental investor demand.
VAM US Large Cap Growth Fund
The Fund’s holdings assigned to the health care and consumer discretionary sectors were the largest source of positive relative returns. At month end, the Fund was underweight the health care and consumer discretionary sectors, and overweight the communication services and industrials sectors.
The security that detracted the most from the Fund’s relative returns during the month was Tesla, Inc. (Ticker: TSLA-US). Tesla, Inc. engages in the design, development, manufacture, and sale of electric vehicles and energy generation and storage systems. TSLA was not owned by the portfolio, as it did not meet the model’s criteria which includes a combination of valuation, revision, momentum, and duration factors.
The holding that contributed the most to the Fund’s relative returns during the month was PulteGroup, Inc. (Ticker: PHM-US). PulteGroup, Inc. engages in the homebuilding business. PHM was a top contributor, as they reported strong second quarter 2024 performance with an increase in earnings per share and home sale revenues. PHM reaffirmed its full-year guidance, expecting to close approximately 31,000 homes in 2024.
VAM Emerging Markets Growth Fund
Exposures to the energy and consumer discretionary sectors, as well as India and China detracted from relative returns. Performance was aided by holdings assigned to the consumer staples and real estate sectors, as well as in Taiwan and South Korea. At month end, the Fund was underweight Taiwan and China, and overweight Brazil and Turkey.
The holding that detracted most from the Fund’s relative returns during the month was Alibaba Group Holding Ltd. (Ticker: 9988-HK). Alibaba Group Holding Ltd. provides internet infrastructure and e-commerce services. The company had positive performance in July, driven by the company’s increasing monetisation effort and a potentially milder competition environment for its e-commerce business for the near-term. The Fund has an underweight position due to the weak growth outlook of its e-commerce business as it continues to lose market share to peers like PDD.
The holding that contributed most to the Fund’s relative returns during the month was Samsung Electronics Co., Ltd. (Ticker: 005930-KR). Samsung Electronics Co., Ltd. engages in the manufacturing and selling of electronics and computer peripherals. The company’s shares rose in July, as the company posted solid second quarter results and the company is seen as moving closer to being qualified with Nvidia for key memory products.
VAM World Growth Fund
Exposures to the consumer discretionary and communication services sectors, as well as Japan and the United States detracted from relative returns. Performance was aided by holdings assigned to the financials and information technology services sectors, as well as in Switzerland and the Netherlands. At month end, the Fund was underweight the United States and France and overweight the United Kingdom and Switzerland.
The holding that detracted the most from the Fund’s relative returns during the month was Pinterest, Inc. (Ticker: PINS-US). Pinterest, Inc. is a pinboard-style photo-sharing social platform that has been enhancing its advertising infrastructure to better monetise its users. The company was a top detractor because the market is concerned about a slowdown in brand advertising spend in the second half of the year, against the current macroeconomic backdrop.
The holding that contributed the most to the Fund’s relative returns during the month was KKR & Co Inc (Ticker: KKR-US). KKR & Co., Inc. is an investment firm that offers alternative asset management as well as capital markets and insurance solutions. The company outperformed on continued strong net new money flows and strong realised profits.
VAM International Opportunities Fund
Exposures to the materials and information technology sectors, as well as France and Japan detracted from relative returns. Performance was aided by holdings assigned to the communication services and consumer discretionary sectors, as well as in the United Kingdom and Brazil. At month end, the Fund was underweight Australia and India and overweight Italy and Germany.
The holding that detracted the most from the Fund’s relative returns during the month was Wiwynn Corporation (Ticker:6669-TW). Wiwynn Corporation is a Taiwanese based computer hardware and memory storage company specialising in network systems, servers and storage devices, and technology infrastructure products used for computer memory storage. The company had been benefitting from stronger demand, driven by sector wide AI investments and growth, but recently warned of a slight slowdown in order activity. Given the strong gains, the company had made in the previous months, the market reacted very unfavorably to the news of slowing growth. The Manager continues to like the company on a medium-term basis, but have reduced exposure in the short-term while they navigate the current business environment.
The holding that contributed themost to the Fund’s relative returns during the month was Ascential Plc (Ticker: ASCL-GB). Ascential Plc is a UK based provider of media consulting, analytics, and e-commerce platform services for exhibitions, festivals, and business fairs. The company has been benefitting from a revival of conferences for the past couple of years and the leading provider for the Cannes Lions Festival. The outsized performance was driven by a takeover over valuing the company nearly 50% higher than current levels.
VAM Global Infrastructure Fund
During the period, data centre business Equinix (“EQIX”) expanded its presence in Southeast Asia through strategic land and data centre acquisitions in Malaysia and the Philippines. The company invested $5m to acquire land in Cyberjaya, enhancing its data centre capacity in Malaysia, where it already operates two facilities. Malaysia’s data centre market is rapidly growing due to its strategic location, favourable government policies, and rising demand for digital infrastructure. Additionally, Equinix acquired three data centres in the Philippines from Total Information Management (“TIM”) through an all-cash transaction, further solidifying its regional footprint. The recent acquisitions will address the rising demand for high-performance data centre services in Southeast Asia, aligning with the company’s vision to lead in the Asia-Pacific region and accelerate the digital economy.
Digital Realty (“DLR”) announced the acquisition of a highly connected colocation data centre on the Slough Trading Estate for US$200m. The deal includes two separate data centres with a total capacity of 15MW and potential for further expansion. This acquisition marks DLR’s entry into the west London submarket and enhances its colocation services, reinforcing its commitment to digital transformation across the UK and Europe while boosting its capacity to support customer growth and scalability.
American Tower (“AMT”) reported robust earnings for the recent quarter, demonstrating strong topline growth and increased profitability. The company saw notable increases in revenue and adjusted EBITDA, reflecting effective cost discipline, margin expansion, and recurring cash flow growth, whilst also raising guidance. The company returned 13.39% during the month, as the positive update and easing interest rate headwinds helped improve investor sentiment.
Chorus (“CNU”) reported its Q4 FY24 connection update, with fibre connections increasing by 10,000 during the quarter. Additionally, ~25% of residential connections now operate at speeds of +1Gbps, presenting a significant growth opportunity for CNU to increase earnings with minimal cost as users upgrade their data speeds. The continued expansion of fibre connections, coupled with strong demand for faster speeds, highlights the essential nature of CNU’s fibre network.
*Fund is currently closed to new subscriptions.
Sources: Driehaus Capital Management LLC, Foresight Capital Management (Company Report, July 2024), FactSet Research Systems, Inc., Reuters, Yahoo Finance 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 July 2024. The performance numbers for the Funds 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.
South African Investors: This is a Section 65 approved fund under the Collective Investment Schemes Control Act 45, 2002 (CISCA). Boutique Collective Investments (RF) (Pty) Ltd is the South African Representative Office for this Fund. Boutique Collective Investments (RF) (Pty) Ltd is registered and approved under the Collective Investment Schemes Control Act (No.45 of 2002).
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