Hilan Ltd.
Hilan Ltd. engages in the provision of Software as a Service (SaaS) for the purpose of managing the enterprise human capital. Its solutions include payroll, human resources, time and attendance, pension, analytics, and business process outsourcing (BPO). The firm offers its services to the industry, high-tech, finance, academic, communications, healthcare, municipal, transportation, retail, education, government, social care, associations, and hotels sectors. It operates through the following segments: Payroll Services, Human Resources, and Organizational Systems, Business Solutions, Computing Infrastructures, and Marketing of Software Products. The Payroll Services, Human Resources, and Organizational Systems segment provides payroll management services, pension operations, enterprise resource planning, other value-added services, and attendance, human resources, business, financial, and relationship management. The Business Solutions segment is involved in the sale of outsourcing and technological value-added solutions, as well as solutions and projects in the field of computing, digital, and innovation. The Computing Infrastructures segment sells solutions in the field of computing infrastructures, managed public and private clouds, advanced information security, and cyber. The Marketing of Software Products segment is composed of the distribution and assimilation of software products and solutions in the field of control, data, analytics and business intelligence, infrastructures and applications in the information technology world, document and content management, information and cyber security, and content delivery network. The company was founded on December 16, 1992 and is headquartered in Tel Aviv, Israel.
COMMENTARY
Market review
Global small-cap equities came under pressure in December, underperforming large caps as investors gravitated toward mega-cap technology and more defensive areas of the market. Market leadership narrowed, and risk appetite became more selective, creating a more challenging environment for smaller, quality-oriented businesses.
Regional performance was mixed. European small caps were relatively resilient, supported by expectations of monetary easing and improving confidence that inflation is stabilising. In contrast, Asian small-cap markets lagged as growth concerns and currency volatility weighed on sentiment, particularly in more cyclical parts of the region.
Style factor dynamics were a dominant driver of returns. Value stocks outperformed growth by a wide margin during the month, with the rotation particularly pronounced in Europe. This shift in market leadership created headwinds for portfolios with a quality and growth bias, as investors favoured cheaper, more economically sensitive names into year-end.
Central bank policy divergence added to cross-asset volatility. The Federal Reserve delivered a rate cut in December as inflation data surprised on the downside, reinforcing expectations of a more accommodative stance. The Bank of England also eased policy, while the Bank of Japan moved in the opposite direction, raising rates to their highest level in decades. The European Central Bank held rates steady, signalling confidence that inflation will converge toward the target over the medium term.
Portfolio Commentary
The Fund lagged its benchmark in December, as style-driven market conditions created a challenging environment for quality-oriented portfolios. Market outcomes during the month were driven primarily by style factors rather than company-specific fundamentals, with investors favouring cheaper, more cyclical exposures into year-end. This dynamic weighed on quality-focused strategies despite generally stable operating performance across portfolio holdings.
A new position was added in Sesa SpA, Italy’s leading technology distributor and IT services provider. Sesa benefits from a dominant market position and significant scale advantages within a fragmented domestic IT market. Its vertically integrated business model spans hardware distribution, proprietary software solutions, and a growing suite of higher-margin SaaS and business services, supporting recurring revenues and customer lock-in. Management’s first-half results released in mid-December reinforced confidence in the investment case, with revenue growth accelerating and margins stabilising as the services division continues to scale.
Several holdings delivered strong performance during the month, driven by company-specific developments. Pexip Holding ASA, a provider of secure enterprise video infrastructure, performed strongly after raising its fourth-quarter recurring revenue outlook, reflecting larger-than-expected enterprise orders and validating its multi-platform collaboration strategy. Flatex, a leading European online brokerage platform, also contributed positively, supported by sustained operating momentum, industry-leading profitability, and an upgrade to full-year earnings guidance as trading activity and customer growth remained robust. Noritsu Koki, a global leader in professional DJ equipment, advanced during the month, underpinned by its dominant market share, recurring revenues from its software ecosystem, and a strong net cash balance sheet.
These gains were partly offset by weaker performance from a small number of holdings. Chemometec, a supplier of cell-counting instruments and consumables for life sciences customers, declined following a strong prior period, with share price weakness driven by normal variability in consumables ordering rather than any change in underlying demand. Instrument sales remained strong, and full-year growth guidance was reaffirmed. Ollie’s Bargain Outlet, a US discount retailer, also detracted after consolidating following significant year-to-date gains, despite solid operational execution and continued progress on its store expansion program.
Overall, December’s performance reflected the impact of sharp style rotations rather than any deterioration in portfolio fundamentals. The portfolio remains positioned around high-quality businesses with strong competitive positions, resilient balance sheets, and clear pathways to sustainable earnings growth.