Monthly report July 2024

Performance

Adrigo Small & Midcap L/S Class A and Class C fell 6,43% and 6,43% respectively in July after fees. Carnegie Small Cap Return Index Nordic rose 4,43% in July. Year to date in 2024, Adrigo Small & Midcap L/S Class A and C are up by 8,28% and 5,31% respectively after fees. The Carnegie Carnegie Small Cap Return Index Nordic is up 16,04% so far this year.

Among the Fund’s largest holdings, Bonesupport (medtech), Sinch (technology) and Enea (software) made good contributions. Among the Funds smaller and medium-sized companies, we noted good contributions from Getinge (medtech) and Lerøy Seafood (salmon farming). As a group, the Fund’s short positions had a negative impact on returns. 

Adrigo Small & Midcap L/S Class A has since inception, and after fees, returned 111.3%. During the same period, the benchmark STIBOR 1M has returned 6.03% and Carnegie Small Cap Return Index Nordic has returned 105.1%. The average annual return for the fund since inception is 11.7%.

The Market and the Companies

Global stock market performance was mixed in July. The MSCI world rose by 1,19%, the S&P 500 rose by 1,21% while the EURO STOXX 50 fell by 0,43%. Emerging markets performed slightly more positively with a gain of 0,43%. India’s BSE and Brazil’s Bovespa rose, while China’s MSCHI recorded declines. In the Nordic region, the Swedish market was the best performer, rising 2,7%. The Danish market fell by 4,3%, while the Finnish and Norwegian markets rose by 0,9% and 2,6% respectively.

Maven Wireless (technology) was the holding that had the most negative impact on our performance in July. After rising 34% in the first half, the stock fell 26% in July. The company’s report was clearly below expectations and the share price fell by 16% on the reporting day. The company has been growing rapidly since it was founded in 2016. Sales rose by 126% and 134% in 2022 and 2023 respectively. Growth slowed to 31% in the first quarter while sales fell by 19% in the second quarter. Order intake increased by 14%. The gross margin amounted to 41% (35%) while operating margin fell from 15% to 2%. Maven Wireless has a very ambitious global growth strategy which implies increased marketing efforts in markets such as North America, India and the UK which impacted margins. In addition, start-up costs for a new production unit (with EMS company Vexos Inc) and investments in type approval for the US products had a negative impact on the results. As mentioned above, Maven is still a young and small company. Sales cycles are often quite long, and it is not surprising to see large swings between quarters. We initiated the position in November 2023 and have a long horizon for this investment. We continue to have trust in the management, products and growth and see significant potential in the stock.

Bonesupport continues to perform better than expected, with organic sales growth of 55% in the second quarter. Sales of Cerament G in North America jumped by 111% with existing clients increasing their usage at the same time as new users are being added. During the fall, the company will officially launch Cermanet G in the trauma indication. Although the product is currently used off-label, we believe that the launch will accelerate growth. We have been invested in Bonesupport since the start of the fund in November 2017 and look forward to many more years of profitable growth.

We received good quarterly earnings from Enea, Getinge, Sinch and Proact. Sinch’s sales and earnings were very much in line with expectations while cash flow was well above expectations. The stock was one of the most volatile on reporting day and rose by 12%. Management reiterated its guidance for a stable second half with organic growth taking off in 2025.

Finally, as always, we would like to thank you, our co-investors, for your continued trust. Please do not hesitate to contact us with any comments or questions.