New positions in Retail and Software sectors

The Fund returned +2.22% in September, outperforming the benchmark return of +1.08%.

Top Holdings (alphabetically)

Boohoo.com United Kingdom Consumer Discretionary

Dino Polska Poland Consumer Staples

Kindred Group PLC Malta Consumer Discretionary

NICE Information Service Korea, Republic Of Industrials

TFI INTERNATIONAL INC Canada Industrials

The Fund returned +2.22% in September, outperforming the benchmark return of +1.08%.

Global equity markets, measured by the MSCI AWCI, retreated more than 3% in September, in what was a volatile month.   In the U.S., equity markets retreated in September as investors worried about stalled fiscal stimulus talks in Washington, the upcoming presidential election, and new coronavirus cases in Europe.  The S&P 500 was down 3.80% on the month while the NASDAQ Composite ended the month down 5.10% as the index’s largest tech names all suffered losses. The U.S. Federal Reserve communicated plans to keep interest rates lower for longer and expectations that Congress will pass a second fiscal stimulus package became more uncertain.  The U.S. dollar rose despite the increasing accommodative policies of the Federal Reserve.  European markets were broadly weaker driven by the recent surge in coronavirus cases across the region and the fading effects of regional stimulus policies. Equity markets in Asia provided mixed results as Japan surged while Australia and Hong Kong detracted. Emerging markets held up comparatively well during September’s sell-off, as the MSCI Emerging Markets Index outperformed the MSCI World Index. Small-cap stocks, notably those outside of the United States, performed well as investors saw value in this segment of the market.

Individual stock selection was the main driver of the Fund’s performance in September.  Increased volatility in the global equity markets was reflected in the Fund as approximately 157 bps separated the top contributor and largest detractor.  As of 30^th September, the top 10 holdings accounted for approximately 35% of the Fund’s assets, with the largest position approximately 4.4% of the portfolio. Regional and sector exposure remained consistent month over month. The Fund has outpaced the benchmark 10 out of the past 12 months and 11 out of the last 16 months.  Over the past year, the Fund’s upside capture has been 142% while the downside capture has been 95% vs. the benchmark generating approximately 9.1% of alpha.  Cash holdings were up month over month at 8%.

Over the month we added several new positions. 

The first is an Israeli discount retailer which recently had its initial public offering on the Tel Aviv stock exchange.  This company has built a successful business offering a variety of merchandise across six major categories and operating over 50 stores across Israel.   We believe this company has a superior business model and are excited about their continued growth and expansion.   The company has very attractive economics and little direct competition.

We also added Cornerstone OnDemand, an enterprise software business based in the U.S. that addresses HR needs at large companies.  Cornerstone OnDemand software impacts every aspect of the employee experience, helping people to make their best work even better – which ultimately translates into greater business results. We believe the company’s recent merger with Saba is underappreciated by the market and the new CEO is poised to create significant enterprise value.

The fund exited the position in Wizz Air.  Despite our admiration for the company, we believe that due to the pandemic air travel could be challenged for longer than many expect.  If the industry needs to go through significant permanent capacity reductions, we would like to stay out of the way.