| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 2.6% | 0.7% | 6.8% |
| 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|
| 6.8% | 0.8% | -38.3% | 35.3% | 22.3% |
Hertford Capital delivered +0.72% in Q4 2024, outperforming the MSCI Europe Small & Micro Cap index which declined -3.47%, bringing full-year returns to +6.79% versus +5.32% for the benchmark. The fund focuses on overlooked European small and micro caps, pursuing public equity opportunities with private equity-like return profiles. Despite challenging conditions for European smaller companies with subdued investor sentiment and constrained liquidity, the manager sees compelling opportunities ahead. The portfolio is concentrated around key themes: 40% in European and UK housing, construction, and mortgage broking recovery; 20% in software and SaaS driven by digitization needs; and smaller allocations to truck/trailer market recovery and discount gyms. Key positions include Nagarro SE (potential takeover target), Moltiply Group (Italian mortgage recovery play), and various special situations. The manager anticipates a narrowing valuation gap for European small caps in 2025, driven by rising M&A activity, renewed liquidity, and lower borrowing costs, foreseeing potential portfolio upside exceeding 50% within twelve to eighteen months.
Hertford Capital focuses on overlooked, misunderstood, or less liquid European small and micro caps, pursuing public equity opportunities with private equity-like return profiles through early, concentrated investments in advantaged, financially healthy businesses with proven capital allocation.
The manager anticipates a narrowing of the valuation gap for European small caps in 2025, driven by rising M&A activity, renewed liquidity, and lower borrowing costs. He foresees potential upside of over 50% for the portfolio within twelve to eighteen months and believes holdings have potential to compound at significant rates over the medium to long-term.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 8 2026 | 2025 Q4 | ACM.DE, BAMI.MI, CRAYN.OL, MAB1.L, MOL.MI, MRL.L, NA9.DE, PHLL.L, QXO, TPFG.L, WOSG.L | Construction, Europe, Mortgage, small caps, software, special situations, value | - | The fund is positioned around the European and UK housing, construction, and mortgage broking market recovery with approximately 40% allocation. The manager sees opportunities in the Italian mortgage market recovery through Moltiply Group, similar to UK positions in Mortgage Advice Bureau and The Property Franchise Group. Around 20% is allocated to software and SaaS companies, driven by ongoing digitization needs. The fund holds positions in companies like Nagarro SE and Crayon Group, with the latter potentially merging with SoftwareOne to create a larger Microsoft partner. The portfolio benefits from recovery in European construction markets through building materials exposure. The segregated account investment in QXO Inc. aligns with extensive research in building and construction materials sector, targeting industry consolidation opportunities. |
| Oct 7 2025 | 2025 Q3 | AOF GR, KSB GR, LSL LN, MAB1 LN, MOL IM, PLNW FP, WOSG LN | Artificial Intelligence, Capital Allocation, Europe, software, Value Investing |
MAB1 LN LSL LN AOF GR |
Hertford underperformed due to volatility in European software names but reiterated conviction in founder-led, capital-light platforms such as ATOSS Software, Planisware, and Moltiply Group. The fund views AI integration as an accelerator of productivity, not disruption, within its portfolio holdings. Strategic exits in cyclical industrials and disciplined capital allocation underpin its high-conviction, concentrated approach. |
| Jul 10 2025 | 2025 Q2 | 9E80 GR, ALBFR FP | Artificial Intelligence, Automation, Data, Enterprise Software, Operating Leverage | - | The commentary centers on agentic AI as a structural inflection point reshaping enterprise software economics. Management argues that AI-driven automation materially expands margins, accelerates growth, and rewrites valuation frameworks for data-rich, workflow-owning businesses. The portfolio is positioned in software and platforms embedding AI deeply into mission-critical operations. |
| Apr 2 2025 | 2025 Q1 | FNOX SS | - | - | |
| Jan 8 2025 | 2024 Q4 | 0O2B LN, ANIM IM, CRYNY, NA9 GR, PHIL LN, QXO, WOSG LN | - | - | |
| Oct 13 2024 | 2024 Q3 | 0OC9 LN, AR4 GR, BIJ GR, CRYNY, GYM LN, JST GR, STO3 GR, TPFG LN | - | - | |
| Oct 7 2024 | 2024 Q2 | 098660 KS, ANIM IM, PHLL LN, TPFG LN, WOSG LN | - | - | |
| Jul 4 2024 | 2024 Q1 | 0AA3 LN, 0RP3 LN, GYM LN, IWB IM, IWG LN, KSB GR, MAB1 LN, OGN LN, SFQ GR, TPFG LN | - | - | |
| Jan 28 2024 | 2023 Q4 | BIJ GR, GUL GR, NKE, RELX, SFQ GR, TRU GR, WINE LN | - | - | |
| Oct 15 2023 | 2023 Q3 | 0SG GR, ANIM IM, MAB1 LN, PHLL LN | - | - | |
| Jul 14 2023 | 2023 Q2 | 4K8 GR, GUL GR, GYM LN, H24 GR, MPCK GR, SKB GR, WINE LN | - | - | |
| Dec 4 2023 | 2023 Q1 | AKW FP, BFIT NA, COK SW, GYM LN, IWB IM, KSB GR, OGN LN, SEM AV, ZVR GR | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
ConstructionCTR Holdings builds structural frames and handles finishing work in Singapore, primarily on public projects. The Singaporean government provides stable cash flows through reliable payment terms. The company had significant net cash position and substantial signed project backlog when purchased. |
Public Projects Singapore Cash Flow Backlog |
MortgageFalling interest rates and federal support for housing should drive a continued rebound in mortgage origination volumes, which should benefit mortgage originators and credit bureaus. FICO launched its new Direct Licensing Program for mortgage lending, which provides greater flexibility to monetize its intellectual property. |
Mortgage Origination Housing Credit Scoring Lending Real Estate | |
SaaSSoftware multiples have compressed as if AI disruption is inevitable, while hyperscalers and enterprises still struggle to demonstrate clear AI ROI. The traditional SaaS playbook faces challenges from AI eating into margins, attacking the pricing unit, and creating cannibalization problems. The software total addressable market is likely to grow 2-3x as AI replaces some work and the gap between software spend and headcount narrows. |
Software Disruption Margins Pricing Platform Shift | |
| 2025 Q3 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
EuropeThe firm is expanding European relationships and published research on European shareholder activism. They view Europe as an attractive alternative to expensive American markets and are building manager relationships in the region. |
Activism Shareholder Valuation Diversification Research | |
Governance |
||
Software |
||
ValueThe manager continues to find attractive value opportunities despite expensive markets, purchasing undervalued companies like Centene, GlaxoSmithKline, Carrefour and PayPal trading at low multiples with strong fundamentals. |
Undervalued Low Multiples Contrarian Opportunistic | |
| 2025 Q2 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 7, 2025 | Fund Letters | Marc-Lennart Bräutigam | MAB1 LN | Mortgage Advice Bureau (Holdings) plc | Financials | Diversified Financial Services | Bull | NYSE | AI, growth, Insurance, leadership, Mortgages, recurring revenue, UK, valuation | Login |
| Oct 7, 2025 | Fund Letters | Marc-Lennart Bräutigam | LSL LN | LSL Property Services plc | Real Estate | Real Estate Services | Bull | NYSE | cash flow, franchise, growth, Mortgages, Real Estate, transformation, UK, valuation | Login |
| Oct 7, 2025 | Fund Letters | Marc-Lennart Bräutigam | AOF GR | ATOSS Software SE | Other | Application Software | Bull | Bolsas y Mercados Españoles (Madrid) | AI, cloud, Europe, founder-led, growth, Margins, recurring revenue, Software | Login |
| TICKER | COMMENTARY |
|---|---|
| ACM.DE | Secondly, I took advantage of a secondary offering in AlzChem AG, acquiring shares at a significant discount to the previous closing price, and later sold them at a satisfactory premium in the market, capturing an immediate return. |
| BAMI.MI | Italy's Banco BPM SpA seized the opportunity to capitalize on the discounted valuation of Anima Holding SpA (Anima), the Milan-based asset management company in which it holds the largest stake. The two firms are closely linked through distribution channels, making the deal strategically sound in our view. We are encouraged to see the share price of Anima rise above the offer, approaching our estimate of fair value. |
| CRAYN.OL | In November, I met Crayon Group Holding ASA's management team at a Tech/SaaS conference, in Stockholm. Management struck a confident tone on the operational momentum of the company. Shortly after I returned to Germany, the company announced a potential merger with SoftwareOne Holding AG, a Swiss competitor, offering cash and stock for our shares. I am currently assessing the offer and have yet to decide whether to stay invested in the broader group. Strategically, the deal aligns with Microsoft's preference for an even larger, more global partner. However, SoftwareOne has faced challenges in the past and I require greater confidence in the combined management team's ability to address these issues. |
| MAB1.L | As you know, we are already invested in the UK mortgage market recovery theme, with positions in Mortgage Advice Bureau Plc and The Property Franchise Group Plc as well as a new undisclosed investment. |
| MOL.MI | During the fourth quarter, I built a major new position in Moltiply Group SpA (Moltiply), formerly known as Gruppo MutuiOnline SpA. With Moltiply, I see a similar opportunity in Italy, where we have the chance to invest alongside one of the most accomplished founders on the Italian stock exchange, at a time when the Italian mortgage market data has just begun to improve. I believe it was an opportune time to invest, as Moltiply's online mortgage business, historically the highest-margin segment of the group, has been subdued. I see no reason why this segment cannot return to historical margin levels, which should positively impact the overall profitability of the group. After entering at an average price of around EUR 33, speculation regarding Moltiply's potential bid for Prosiebensat 1 Media's Verivox led to a rise in the share price. I entered Moltiply at a reasonable valuation, offering an attractive normalized free cash flow yield. With a promising growth outlook, driven by the recovery in the Italian mortgage market and acquisitions, the company presents a solid opportunity for long-term compounding. |
| MRL.L | During the quarter, I made two additional opportunistic investments in special situations, with the intention of a short holding period. First, I invested in Marlowe Plc, which was about to demerge into two distinct entities due to a lack of synergies between them. I fully support the board's decision to allow both companies the opportunity to create value for shareholders on a stand-alone basis. |
| NA9.DE | In October, we initiated a new position in Nagarro SE (Nagarro), a software development company, capitalizing on a sharp decline in share price following an anticipated profit warning. Shortly after, rumours surfaced about a potential bid for the company by private equity firm Warburg Pincus. A couple days later, the company confirmed the rumours, indicating that multiple potential bidders were interested. The confirmation of these rumours initially propelled the stock upward, but in the absence of any further news, the share price has recently retreated to our original purchase price, hovering just below EUR 80. In our view, this creates a rare and compelling special situation. The risk-reward dynamics are particularly appealing, prompting us to further increase our position. |
| PHLL.L | In September 2023, we invested in Petershill Partners Plc, which helps private equity & debt firms scale by leveraging the Goldman Sachs (major shareholder) ecosystem. Since then, we have been pleased with its operational performance and recent shareholder-friendly moves, including selling a stake in Accel-KKR above carrying value and announcing a special dividend. |
| QXO | In 2024, we initiated a position in QXO at approximately $11 per share. Under Brad Jacobs' leadership, the company is in the early stages of executing a bold plan to consolidate and disrupt the $800 billion building products distribution industry. Having previously invested in two of Brad's highly successful ventures—United Rentals and XPO Logistics—Tsai Capital is excited to back his latest endeavor. Our strategy focuses on partnering with exceptional capital allocators. Having followed Brad's remarkable career for nearly three decades and spent countless hours in discussions with him, I rank him among the very best. His personal commitment of $900 million to QXO further aligns his interests with ours. In August 2025, QXO completed its first acquisition: Beacon Roofing Supply, Inc., purchased in an all-cash deal valued at approximately $11 billion and funded with a mix of equity and debt. With 8,000 employees and 110,000 customers, Beacon is North America's largest roofing products distributor, also offering complementary building products and waterproofing materials. Beacon stands to benefit directly from a four-million-unit housing shortage in the U.S. and from the country's aging housing stock. We view this acquisition as comparable to Brad's 2015 purchase of Con-way for XPO, which doubled cash flow in just 3.5 years. Brad and his talented management team have already implemented operational changes at Beacon, including streamlining its nine-level legacy organizational chart. We expect the team to expand Beacon's EBITDA margins by about 500 basis points and to double cash flow within four years. Ultimately, we envision QXO achieving over $50 billion in revenue with returns on capital of 17-23%. |
| TPFG.L | As you know, we are already invested in the UK mortgage market recovery theme, with positions in Mortgage Advice Bureau Plc and The Property Franchise Group Plc as well as a new undisclosed investment. |
| WOSG.L | The fifth largest contributor was Watches of Switzerland (+29.5% +62 bps), the British dealer of luxury watches and Rolex's most important authorized dealer. Again, political developments helped sentiment after US tariffs on Swiss goods officially reduced to 15% (from 39%)—a move applied retroactively from mid-November 2025 that provides meaningful relief for Swiss watch exports. |
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