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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"European small cap value fund added four high-quality businesses in Q3 at attractive valuations including Italian asset manager Anima, gaming company Enad Global 7, UK mortgage broker MAB, and alternative asset manager Petershill Partners. Portfolio trades at 8.7x normalized P/E versus 14.5x for the index while generating superior 24% median ROIC with strong cash positions and aligned management."
Gehlen Bräutigam Capital returned -2.59% in Q3 2023, bringing the fund's inception-to-date annualized return to 2.28%. The managers believe this is an exceptional time to lock in future returns across European small and micro caps, adding four new investments during the quarter. Key additions include Anima Holding, Italy's largest independent asset manager with exclusive bank distribution agreements and strong cash generation trading at attractive valuations; Enad Global 7, a gaming company focused on stable live service games with significant net cash and high free cash flow yields; Mortgage Advice Bureau, a UK financial services firm with a capital-light model and growing market share; and Petershill Partners, which owns stakes in leading alternative asset managers and offers high dividend yields with share buybacks. The portfolio's median normalized P/E of 8.7x compares favorably to 14.5x for the MSCI Europe Small Cap index, while maintaining superior quality metrics including a 24% median ROIC. More than half of holdings have positive net cash balances with aligned management ownership focused on long-term value creation.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
High conviction evidenced by concentrated portfolio with top 10 positions representing 59.5% of assets, detailed fundamental analysis of each new investment with specific valuation metrics, and explicit position sizing. The managers provide specific entry prices, multiples, and return expectations for each holding.
Growth Outlook
The managers express strong optimism about the European small and micro cap opportunity set, stating 'we believe that this is a time during which exceptional future returns can be locked in across European small and micro caps' and describing their portfolio as 'an exceptional collection of opportunities.'
Risk Appetite
The fund is actively deploying capital with four new investments added during the quarter, but maintains a measured approach with well-financed companies and strong cash positions. The positioning shows selective risk-taking rather than maximum exposure.
Capital Deployment
Moderate deployment activity with four new investments added during the quarter, partially funded by exits from three positions. This represents active rotation and selective deployment rather than aggressive cash deployment or significant de-risking.
Forward Guidance
The managers indicate continued active investment with ongoing due diligence processes but do not express urgency or aggressive deployment plans. They describe a selective approach to finding attractive opportunities.
Language Signal
Language is predominantly positive with terms like 'exceptional future returns,' 'attractive valuations,' 'very promising,' and 'exceptional collection of opportunities' outweighing limited risk discussions.
Perceived Risk
Moderate risk acknowledgment with specific risks identified for individual holdings (economic downturn impact on MAB, private equity sentiment for Petershill) and some macro concerns about interest rates affecting property transactions, but risks are not central to the letter's narrative.
Opportunity Density
High opportunity density with managers stating this is 'a time during which exceptional future returns can be locked in' and describing ongoing intensive due diligence processes on several opportunities, indicating a rich pipeline of potential investments.
Time Horizon
Multi-year investment horizon evidenced by focus on long-term distribution agreements (Anima's partnership with Banco BPM expires in 2037), emphasis on recurring revenue streams, and discussion of medium-term catalysts and value drivers across holdings.
