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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Ennismore European Smaller Companies Fund 2023 Q2 Investor Letter | Buyside Digest

Back to Fund Profile (Ennismore European Smaller Companies Fund)

Primary Source Intelligence • Q2 2023 Letter Analysis

Ennismore European Smaller Companies Fund Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Ennismore European Smaller Companies Fund. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

YTD-5.9%

Annualized+11.9%

Positioning StanceConstructive

Market CapSmallCap

GeographyEurope

Digest Analysis

Quick Take

"European smaller companies long/short fund struggling with short book performance despite manager conviction in overvaluation thesis. Long book offers compelling value, especially UK names trading at unsustainably low levels."

Executive Summary

Ennismore European Smaller Companies Fund posted a -2.6% return in June 2023, bringing year-to-date performance to -5.9%. The disappointing performance was primarily driven by the short book, which contributed negative 5.3% year-to-date, while the long book added only 0.1% in June. The manager acknowledges errors in short positioning but maintains conviction that many short positions remain significantly overvalued relative to sustainable earnings potential. Conversely, the long book contains many undervalued holdings, particularly UK-listed companies that appear exceptionally cheap. Key contributors included SoftwareOne (takeover offer from Bain Capital) and Novem Group (strong results plus 11% dividend yield). The fund's largest detractor was an unnamed position that rose over 40% without news flow. The portfolio maintains 87.1% long exposure and 49.7% short exposure for 37.4% net exposure. The manager's detailed analysis of Morgan Advanced Materials exemplifies their value-oriented approach, targeting quality businesses trading at significant discounts to intrinsic value.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

72%

CautiousHigh

High Conviction (72%)

High conviction demonstrated through concentrated portfolio with named top 5 holdings totaling 17.7% of NAV, detailed fundamental analysis of Morgan Advanced Materials with specific valuation targets and 40% upside case, and maintained positioning despite short book underperformance. The manager provides specific thesis and conviction statements about individual holdings.

Growth Outlook

38%

BearishBullish

Neutral (38%)

The manager expresses cautious sentiment about market conditions, noting disappointing performance and acknowledging that 'the market doesn't agree right now' with their short positioning thesis, while maintaining some optimism about long positions being undervalued.

Risk Appetite

0%

DefensiveAggressive

Defensive (0%)

The fund maintains significant exposure with 87.1% long and 49.7% short positions for 37.4% net exposure, showing neither aggressive risk-taking nor defensive positioning, but rather a balanced approach despite recent underperformance.

Capital Deployment

0%

De-riskingDeploying

De-risking (0%)

No specific information provided about cash level changes or net deployment activity. The letter mentions opening 1 long position and closing 8 longs, plus opening 5 shorts and closing 15 shorts, suggesting rotation rather than net deployment or de-risking.

Forward Guidance

0%

CautiousExpansionary

Cautious (0%)

No explicit guidance provided about future deployment intentions or directional changes to positioning. The manager maintains current strategy without indicating plans to significantly alter approach.

Language Signal

38%

BearishBullish

Balanced (38%)

Language is mixed with negative terms like 'disappointing performance,' 'errors,' and 'permanent loss' balanced against positive language about 'undervalued,' 'cheap,' and 'compelling value,' with slightly more emphasis on current challenges.

Perceived Risk

45%

Low RiskElevated

Moderate Risk (45%)

Moderate risk acknowledgment through discussion of disappointing performance, acknowledged errors in short book, and specific mention of tinyBuild position likely leading to permanent capital loss. Risk discussion is present but not central to the letter's narrative.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

Manager sees selective opportunities with emphasis on undervalued long positions, particularly UK holdings described as 'particularly cheap' and 'unsustainably low valuations.' The detailed Morgan Advanced Materials analysis suggests the manager continues to find compelling individual opportunities despite market challenges.

Time Horizon

70%

Short-TermLong-Term

Decade+ (70%)

Multi-year investment horizon evidenced by detailed fundamental analysis of Morgan Advanced Materials with expectations for medium-term growth around 5% per annum and specific valuation targets to end of 2024. The manager focuses on sustainable earnings potential and long-term business quality rather than near-term catalysts.