ANNUAL REVIEW 2020 VALEUR INTRINSEQUE - DECEMBER 31ST - Fourpoints IM
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ANNUAL REVIEW 2020
DECEMBER 31ST
VALEUR INTRINSEQUE" The future ain’t what it used to be " - Yogi Berra Dear investor and partner, 2020 has been a very eventful year, both in our daily life and on the stock market. During this troubled time, it was particularly difficult to extricate oneself from the continuous stream of often contradictory news, delivered without hindsight or thorough verification to meet the need for immediate information. We were thus subjected throughout the year to a succession of debates, ultimately quite futile, on topics such as the dangerousness of Covid 19, the decision to lock down, the effectiveness of hydroxychloroquine, the usefulness of masks or the emergence of a second wave. On these topics, as on the movements of the stock market, we can always try to predict the future, but ultimately events force themselves on us. To navigate through this fog of uncertainty and plan for the longer term, we were able to rely on the beacon of our investment process. And as the English saying attributed to Winston Churchill says, we didn’t let a good crisis go to waste. The cash available in the portfolio at the start of the year enabled us to invest heavily during the sales period following the sharp stock market decline in March, which contributed to the significant rebound in the fund's performance in the second half of the year. As usual, we didn't try to play a theme or follow a trend, but we just looked for opportunities that matched our selection criteria. We especially focused on companies that were impacted in the short term by the health crisis but which will eventually emerge stronger, which should result in the medium term by a significant stock market appreciation. We have favored companies with a healthy financial balance sheet as well as a major shareholder and / or a management team with a good track record in capital allocation. This is what will allow these companies to weather the shock and benefit from the troubles faced by their competitors to better bounce back when the health situation improves. This resulted in investments in a wide variety of companies, both in terms of business sectors, geography and size. We initiated 19 new positions, ranging from world-famous American companies like Alphabet, Otis or Carrier, to small European companies like Marr, Bénéteau or Palfinger. The diversity of the investments made is a good illustration of the wide range of possibilities offered by our methodology, which we believe to stand out from the increasingly standardized offer provided by the equity management universe. Thus, in 2020, we were able to accelerate the renewal of the portfolio which began in 2019. The work carried out over the past 18 months has resulted in a portfolio that is now more diversified and more invested. Despite the recent rebound, we believe that the stocks in the portfolio should benefit from the coming economic recovery and still have strong upside potential in the medium term. WIshing you an excellent year 2021, Damien Audoyer
Table of contents :
I . A B S O L U T E A N D R E L A T I V E P E R F O R M AN C E S I N C E I N C E P T I O N – R e t a i l s h a r e ....................... 1
I I . P O R F O L I O A S O F D E C E M B E R 3 1 s t , 2 0 2 0 ................................................................................................. 2
II.I. Inventory and breakdown by industry sector and by market capitalization ............ 2
II.2 Forex exposure as of December 31 s t , 2020 ........................................................................... 4
III. P O R T F O L I O E V O L U T I O N I N 2 0 2 0 .............................................................................................................. 5
III.I. Main transactions during the year ....................................................................................... 5
III.2. Year-to-year portfolio compariso n ........................................................................................ 6
III.3. Portfolio turnover in 2020 ....................................................................................................... 7
III.4.Performance contributions for 2020 ...................................................................................... 7
III.5. Investment stories ...................................................................................................................... 8
III.5i. Review of our investment in GREGGS ............................................................................. 8
III.5ii. Review of our investment in THERMADOR GROUPE .................................................. 9
IV. A N N E X ................................................................................................................................................................ 10I. ABSOLUTE AND RELATIVE PERFORMANCE SINCE INCEPTION – Retail share
300
Valeur Intrinsèque P MSCI World DNR €
250 139.6%
135.2%
200
150
100
50
0
FUND FUND FUND (P
MSCI World MSCI World MSCI World
(P share) (P share) share)
2001* 14.8 -14.9 2008 -38.1 -37.6 2015 -16.6 10.4
2002 -22.1 -32.0 2009 57.2 25.9 2016 31.8 10.7
2003 32.9 10.7 2010 19.7 19.5 2017 8.4 7.5
2004 16.3 6.5 2011 -17.4 -2.4 2018 -18.7 -4.1
2005 14.5 26.2 2012 22.6 14.0 2019 1.8 30.0
2006 13.2 7.4 2013 26.8 21.2 2020 3.4 6.3
2007 -11.3 -1.7 2014 -3.1 19.5 Annualized Performance 4.5 4.6
Cumulative Performance 135.2 139.6
Retail share and MSCI World TNR Performance as of December 31th in percentage. I share class performance is available on our website. Past performance
does not guarantee future performance. *Fund's inception on June 6th 2001
1II. PORFOLIO AS OF DECEMBER 31 s t , 2020
II.I. Inventory and breakdown by industry sector and by market capitalization
Average
acquisition % Net
Share Market
Currency Company Activities Shares price of new Asset
price Value
stocks in 2020 Value
(in currency)
EUR Bénéteau Boat manufacturer 96 582 6.68 9.46 914 149 2.2%
Covestro Specialty chemicals 20 022 50.48 1 010 711 2.5%
IPSOS Market research 56 200 27.6 1 551 120 3.8%
Marr Distribution of food products 89 130 12.17 16.86 1 502 732 3.7%
Manufacturer of innovative lifting
Palfinger 50 000 22.5 25.9 1 295 000 3.1%
solutions
Pirelli Tire manufacturer 282 243 4.17 4.433 1 251 183 3.0%
Manufacturing of small household
Seb 5 500 120.15 149.0 819 500 2.0%
equipment
Sodexo Food services / Facilities management 36 876 69.22 2 552 557 6.2%
Takkt Business equipment distribution 160 000 10.66 1 705 600 4.2%
12 602 551 30.7%
CHF LafargeHolcim Building materials 27 000 35.86 48.62 1 213 758 3.0%
1 213 758 3.0%
DKK ISS Facilities management 79 600 105.4 1 127 144 2.7%
1 127 144 2.7%
GBP Compass Group Food services 103 398 9.41 13.63 1 574 477 3.7%
1 500
Mitie Group Facilities management 0.41 0.41 687 074 1.7%
000
Next Clothing retailer 16 093 70.86 1 273 992 2.9%
Photo-me 1 100
Photographic booths and laundries 0.55 0.488 599 710 1.7%
International 000
4 135 253 10.0%
NOK Subsea 7 Offshore project management 465 624 87.86 3 905 259 9.5%
3 905 259 9.5%
USD Alphabet Technological services 500 1146.36 1752.64 716 211 1.7%
Manufacturing of airbags and seat
Autoliv 12 000 64.22 92.1 903 273 2.2%
belts
Berkshire Hathaway Investment companies 6 870 231.87 1 301 906 3.2%
Carrier Global Air conditioning / Refrigeration 35 800 15.86 37.72 1 103 654 2.7%
Foot Locker Sporting goods retailer 38 300 37.02 40.44 1 265 867 3.1%
Distribution for healthcare
Henry Schein 18 300 52.34 66.86 999 990 2.4%
professionals
Loews Investment companies 23 300 45.02 857 314 2.1%
Markel Investment companies 1 755 1033.3 1 482 115 3.6%
MSC Industrial
Industrial distribution 14 600 67.85 84.39 1 006 983 2.5%
Direct
Otis Worldwide Elevator manufacturer 18 400 47.67 67.55 1 015 831 2.5%
W.W. Grainger Industrial distribution 2 350 274.94 408.34 784 274 1.9%
World Fuel Services Fuel Distribution 40 000 22.67 31.16 1 018 675 2.5%
12 456 094 30.4%
CAD Fairfax Financial Investment companies 8 595 433.85 2 392 187 5.8%
Leon's Furniture Furniture store chain 85 200 20.63 1 127 583 2.7%
3 519 770 8.5%
Equities 38 959 828 94.8%
Cash 2 151 143 5.2%
2SECTOR BREAKDOWN
As a reminder, this breakdown is not based on a sector allocation that was decided ex-ante. It is merely the
result of our "bottom-bottom" approach.
Sectors Breakdown
Outsourcing services 19.8%
Al pha bet
Compa s s Group
IPSOS
ISS
Mi ti e Group
Sodexo
Professional distribution 17.1%
Henry Schei n
Ma rr
MSC Indus tri a l Di rect
Ta kkt
W.W. Gra i nger
Worl d Fuel Servi ces
Investment companies 14.7%
Berks hi re Ha tha wa y
Fa i rfa x Fi na nci a l
Loews
Ma rkel
Construction / Renovation 11.3%
Ca rri er Gl oba l
La fa rgeHol ci m
Oti s
Pa l fi nger
Consumer discretionary 11.1%
Autol i v
Bénétea u
Photo-me Interna ti ona l
Pi rel l i
Groupe Seb
Oil & Gas services 9.5%
Subsea 7
Retail 8.7%
Foot Locker
Leon's Furni ture
Next
Industry 2.5%
Coves tro
Cash 5.2%
3CAPITALISATION BREAKDOWN
Market capitalisation % Net Asset
< EUR 500 M € 1.5%
EUR 500 M - 2 000 M 23.8%
EUR 10,000 - 50,000 M 26.2%
> 10 Mds € 43.3%
Cash 5.2%
II.2 Forex exposure as of December 31 s t , 2020
Following the application, effective January 1st, 2018, by the AMF of the recommendation given by the ESMA, currency
hedging policies must now be implemented systematically, making sure that the hedge ratio does not deviate by more
than +/-5% from the hedging target set in the prospectus of the relevant UCITS. For the P and I classes of Valeur
Intrinsèque, the hedging target was set at 100% (see prospectus available on www.fourpointsim.com).
This 100% systematic hedging policy is generally applied only to currency exposures greater than 5% of the portfolio, in
accordance with the new regulatory doctrine and the fund's prospectus.
4III. PORTFOLIO EVOLUTION IN 2020
III.I. Main transactions during the year
2020 TRADES
Stocks Movements
Randstad Complete disposal
Thermador Groupe Complete disposal
Mohawk Industries Complete disposal
Greggs Complete disposal
Berkshire Hathaway Reduced position
Covestro Reduced position
Loews Reduced position
Markel Reduced position
Next Reduced position
ISS Added to position
Sodexo Added to position
Takkt Added to position
Alphabet New position
Autoliv New position
Bénéteau New position
Carrier Global New position
Compass New position
Foot Locker New position
Greggs New position
Henry Schein New position
LafargeHolcim New position
Marr New position
Mitie New position
MSC Industrial Direct New position
Otis Worldwide New position
Palfinger New position
Photo-me International New position
Pirelli New position
Seb New position
W.W. Grainger New position
World Fuel Services New position
5III.2. Year-to-year portfolio compariso n
As of December 31, 2020 As of December 31, 2019
Currencies Stocks % AN Currencies Stocks % AN
EUR Bénéteau 2.2% EUR Covestro 3.3%
Covestro 2.5% IPSOS 3.3%
IPSOS 3.8% Randstad 2.2%
Marr 3.7% Sodexo 4.7%
Palfinger 3.1% Takkt 3.1%
Pirelli 3.0% Thermador Groupe 2.0%
Seb 2.0% 18.6%
Sodexo 6.2%
Takkt 4.2%
30.7%
CHF LafargeHolcim 3.0%
3,0%
DKK ISS 2.7% DKK ISS 2.3%
2.7% 2.3%
GBP Compass Group 3.7% GBP Next 4.4%
Mitie Group 1.7% 4.4%
Next 2.9%
Photo-me International 1.7%
10,0%
NOK Subsea 7 9.5% NOK Subsea 7 9.6%
9.5% 9.6%
USD Alphabet 1.7% USD Berkshire Hathaway 7.5%
Autoliv 2.2% Loews 7.2%
Berkshire Hathaway 3.2% Markel 8.4%
Carrier Global 2.7% Mohawk Industries 4.0%
Foot Locker 3.1% 27.1%
Henry Schein 2.4%
Loews 2.1%
Markel 3.6%
MSC Industrial Direct 2.5%
Otis Worldwide 2.5%
W.W. Grainger 1.9%
World Fuel Services 2.5%
30.3%
CAD Fairfax Financial 5.8% CAD Fairfax Financial 6.7%
Leon's Furniture 2.7% Leon's Furniture 1.3%
8.6% 8.0%
Equities 94.8% Equities 70.0%
Cash 5.2% Cash 30.0%
6III.3. Portfolio turnover in 2020
The year 2020 was one of the most active periods in the history of the fund. As explained in the letter at the
beginning of this report, we initiated many positions while reducing or totally selling off some existing lines. It
is therefore not surprising that this renewal period resulted in a particularly high portfolio turnover rate.
Calculated according to the AMF-AFG method, it amounted to 67.9% over the year.
Given the long-term investment horizon of the fund, in the future we should return to a turnover rate closer
to its historically lower level.
III.4.Performance contribut ions for 2020
Main contributors Main detractors
Carrier Global 3.8% Mohawk Industries -3.4%
Alphabet 1.3% Fairfax Financial -3.1%
MSC Industrial Direct 1.2% Loews -2.3%
W.W. Grainger 1.2% Markel -1.7%
Otis Worldwide 1.2% Sodexo -1.6%
Total 8.7% Total -12.0%
7III.5. Investment stories
III.5i. Review of our inves tment in GREGGS
Greggs is a take-out chain with more than 2,000 outlets in the United Kingdom. It is one of the leaders in this
highly fragmented market with around 5% market share.
The group was originally a chain of bakeries with a complementary food offering, but over time abandoned its
primary business to focus on sandwiches and snacks. Greggs is unique in having his own bread making facilities
and kitchens. These facilities regularly supply a very dense network of points of sale with fresh products,
allowing Greggs to benefit from significant economies of scale in production and distribution.
As its culinary offering is typically British, the company has no intention to expand abroad. On the contrary, it
is seeking to further expand its domestic network in order to capture as many customers as possible. Indeed,
as "snacking" is often an impulse purchase, an increased presence of the brand increases the chances of
attracting a consumer to a store. For example, Greggs has twice as many outlets as McDonald's or Starbucks
in the UK. The strategy is paying off as this expansion is not implemented at the expense of existing stores: in
10 years, the number of points of sale has increased by a third while turnover has almost doubled!
The management team has demonstrated a good allocation of capital by focusing on the organic growth of the
group with the opening of new stores as well as regular investments in its production capacities and its supply
chain. This translated into strong revenue growth and an increase in operating margin, without resorting to
acquisitions and while maintaining a positive net cash position.
When we invested in late September, Greggs’s market cap had halved since the start of the year. While the
economic impact of the various lockdowns and restriction measures implemented in the United Kingdom was
significant, we felt that this market correction was excessive given the company's qualities and the strength of
its balance sheet. In our opinion Greggs is solid enough to weather the health crisis and should return in one
to two years to economic performances at least close to those of recent years, which justified a higher stock
market valuation.
In the end, we didn’t have to wait that long, as Greggs’s share price rebounded sharply in the months following
our investment. Greggs is still a great company, but at the time we felt that its valuation was too high to keep
it in our portfolio. We no longer had a sufficient margin of safety, especially in view of the uncertainties about
the course of the economic recovery and the impact of Brexit. We therefore sold the position completely in
November, with a gain of almost 60%.
As long-term investors, it is very rare for us to hold a position for only two months, but we must also be able
to remain faithful to our initial investment thesis and make a profit quickly when the stock market context
gives us the opportunity to do so.
8III.5ii. Review of our inves tment in THERMADOR GROUPE
Our investment in Thermador dates back to October 2014. Thermador is a French company with an original
positioning: it acts as an intermediary between many producers of technical equipment for the construction
industry and professional distribution chains such as Brossette or Point P. It deals with standard products such
as accessories for heating, pumps, plumbing equipment or swimming pool equipment.
The group is made up of about ten subsidiaries that are specialized by product type and are commercially
independent. Each subsidiary is therefore managed in an entrepreneurial manner with its own objectives. The
group has developed by organically growing its subsidiaries and creating new ones, either by making
complementary acquisitions or by developing related offers internally. The group's turnover has thus doubled
over the last 10 years, while maintaining high levels of margins and profitability.
Thermador's strength lies in its ability to ensure fast and complete deliveries of small recurring orders to its
customers (less than €1000 on average). The company has for this purpose large inventories centralized on its
site near Lyon. Beyond the economies of scale achieved on its procurement, this allows Thermador to optimize
its distribution costs by loading the delivery trucks with products from its various subsidiaries.
Thermador is managed by an experienced management team with a very rational capital allocation. It has been
able to implement its development strategy without going into debt, while offering a generous dividend policy.
After trimming the position several times over the years, we finally sold it at the end of March in a very special
context. While we had no doubts about Thermador's ability to weather the crisis, we felt that the expected
rebound in its activity was more distant and more uncertain than for other sectors. Moreover, its share price
had resisted relatively well given the stock market storm that was then raging. We therefore decided to sell
the position in order to seize other opportunities that we believed at the time to have more potential.
The company subsequently proved us wrong as it finally achieved a very good year in 2020, buoyed by the
renovations carried out by the French in their homes following the first lockdown. However, as Warren Buffett
says of the business world, rear-view mirror is always clearer than the windshield, and the cash generated by
this operation was put to good use.
In addition, despite this early disposal, Thermador will have been a good investment for the fund, with an
annualized rate of return of more than 11% over the holding period.
9IV. ANNEX
IV.1 . OUR MANAGEMENT PROCESS
Valeur Intrinsèque's managers implement a “value” investing process, based on the concepts of intrinsic value, margin
of safety and independent investment research. The objective of our investment process is twofold: to reduce the risk
that our funds suffer a permanent loss of value, and to generate for each of our funds a satisfactory long term rate of
return per share*.
The investment fund (UCITS) Valeur Intrinsèque (established in France and started in 2001) is invested primarily in
shares of companies listed on the stock exchanges of OECD countries. But if the managers consider that reasonably
priced investment opportunities have become too scarce, the investment portfolio may be allocated, to a significant
extent, to fixed income and monetary assets.
The investment process implemented by Valeur Intrinsèque's managers is detailed in “Principes de gestion de Valeur
Intrinsèque” which is available on the company’s website under the heading “Nos fonds”.
Any decision to subscribe to this fund should be based on a thorough analysis of the fund's prospectus and KIID, which
are available on the company’s website under the heading “Nos fonds”.
* The investment time horizon of the fund Valeur Intrinsèque is 5 years or longer and the risk of permanent loss of
capital is significant.
IV.2 . INVESTORS REL ATIONS
In order to follow up with their investment, unitholders can use three types of documents that are published and made
available on the company’s website: a quarterly report, a biannual report and an annual review, the latter being designed
in the spirit of the annual report of a public company.
Julien Mathou, Head of Investor Relations, is available to arrange a call or an interview with the fund’s investment team.
Contact details :
cmichel@fourpointsim.com jmathou@fourpointsim.com
06.80.18.09.53 01.86.69.60.61
10DISCLAIMER
This document does not constitute or form part of an offer to issue or sell, or of a solicitation of an offer to subscribe or
buy, any securities nor does it constitute a financial promotion, investment advice or an inducement to participate in any
product, offering or investment. The expectations expressed about the stocks, the market, the economy and other factors
represent the opinion of the FOURPOINTS IM and may not be realised in the future. Performance is presented for a
specific period. Performance may be different in the future. Performance for an index is presented. The fund is not
managed to track the benchmark and will likely differ in terms of industry weights, market capitalisation weights and in
terms of number of securities held. Therefore performance for the fund will likely differ from performance of the index
in any particular period.
11
FOURPOINTS IM - 162 boulevard Haussmann 75008 Paris – Tél : 01 86 69 60 65 - www.fourpointsim.com
Société de gestion de portefeuille – Agrément AMF GP94004 - SAS au capital de 2 210 000 € - RCS 398 027 151You can also read
