Meeting portfolio companies in London – Our Portfolio manager Kenneth Blomqvist’s thoughts and insights
In late March, I travelled to London to meet some European smaller companies of which several are portfolio companies in our European small and micro cap funds.
During the meetings I focused on the following topics – the companies´ internal focus on innovation and development of future products and offerings, the companies´ sustainability work, the short-term situation mainly what comes to the supply of components and input parts, the long-term growth prospects combined with pricing power as well as the companies´ ability to differentiate from their competitors.
During the days I met, among others, with industrial automation group Kontron, industrial technology company Jenoptik, pharmaceutical company Laboratorios Farmaceuticos Rovi, digital payment company Boku, ventilation group Volution and industrial equipment technology company PVA Tepla. The demand continues to be strong, especially in segments that are driven by investments in environmentally friendly solutions, energy solutions, automatization, digital solutions, and healthcare related products. Headwinds seen earlier, what comes to component shortage and logistical constraints, have been diminishing during the year. Orderbooks are still strong, which gives the companies visibility for the foreseeable future. During our discussions with the companies’ top management teams, I was pleased to see that the companies´ take the sustainability discussion seriously. Our focus this time was on diversity what comes to gender, cultural background among employees but also diversity from a wage perspective. As investors and owners of the smallest companies on the stock market we see ourselves as speaking partners with them what comes to sustainability and how the companies can improve their sustainability work in the future.
After several years of supply chain issues and component shortage combined with the geopolitical tensions that we see globally, a topic that was on everybody’s lips was a possible investment boom in Europe in the coming years due to these circumstances. These investments are also driven by environmental issues. Moving products around the globe is of course not the most environmentally friendly and sustainable approach. According to the companies this would mean investments in manufacturing, logistics, energy sources and storage capacity. One central theme as we see it is automatization investments due to lack of workforce and high labour costs in Europe. To capitalise on this long-term structural growth trend we have identified companies like Kardex, Kontron, PVA Tepla, Note, Stemmer Imagine to mention a few, that we are invested in. We continue searching for companies that will grow faster over time due to this trend.
After three days I flew home to Helsinki satisfied and full of new ideas and with a strong confidence in our investments. It is as always great to talk to company management teams and other investors in person.
Kenneth Blomqvist, Portfolio Manager