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Europe’s smaller, family owned enterprises outshine blue chips

Philip Best & Marc St John Webb – monthly commentary February 2017

Markets have been consolidating after the sharp rally since the surprise USA election results last November. With a 1.1% rise in the Euromoney index, smaller companies fared better than blue chips where the Stoxx 600 Europe index fell by 0.4%.

Business trends were firmer at the end of last year and there seems to be a fair level of confidence in the outlook for this year, according to QUAERO Capital’s Smaller Companies strategy managers Marc Saint John Webb and Philip Best.

The managers note that Dieter Manz’s high tech manufacturing lines producer Manz Automation share rose 17% after announcing the largest contract win in its 30-year history, for a CIGS thin film solar line in China.

The company has had a poor track record of profitability, as business with the likes of Apple and Foxconn has been lumpy. It has also been spending over €20 million every year to develop the best thin film (flexible, lighter and cheaper) solar cell manufacturing lines, with no revenue generation. But the division will move into net profit this year as the China solar order is worth €263 million, more than the firm’s entire revenues last year.

At the same time, Manz’s battery and display divisions are improving. The company’s balance sheet will be bolstered as Shanghai Electric make prepayments which will represent a €100 million cash inflow (one third of market capitalisation) in the first quarter of this year.

Manz engineers are also assembling the Adidas ‘Speedfactory’ to automate previously labour-intensive processes in the manufacturing of sports shoes. With its new Chinese shareholder, Manz may become a key player in the Industry 4.0 automation trend to increase the productivity of Chinese factories to compensate for rising labour costs.

Elsewhere, the Arnoux family’s Catering International Services, which offers catering and facilities management to companies in remote locations, rose 16% on the publication of faster revenue growth at the end of 2016, following improved demand from the oil and resources sectors.

Three other companies have recorded notable share price rises of 14%. The Bossard family’s fastener technology company has enjoyed stronger sales recently and now has a contract to supply all the fasteners and logistics for the Tesla factory. Shares in the Despature family’s French textiles company Damartex benefitted from very cold weather in Europe, which boosted its Thermolactyl winter warmer range. Damartex is barely trading above its book value and on a PE ratio of only 13 times but is well positioned on Europe’s demographically growing market of senior citizens.

The Peugeot family’s holding company FFP rose following a strong performance of the main car brand, but also driven by the takeover bid on aerospace equipment company Zodiac, in which it holds a 5% stake. Even after the rise the share is still trading at a discount of more than 40% to the sum of the parts value.

Notes to Editors

About QUAERO Capital

QUAERO Capital is an independent, specialist fund management firm which brings together independently minded investment managers who use original research to provide highly actively managed strategies for clients in the institutional and wholesale markets. QUAERO Capital was founded in 2005 in Geneva as “Argos Investment Managers S.A." It is a 100% employee-owned company with its founding partners taking an active role in its investment processes. The firm is a team of 29 individuals including 17 experienced investors who enjoy working in an investment focused environment. QUAERO Capital is regulated by the FINMA, the Swiss Financial Markets Authority. It offers a range of high conviction investment strategies spread across 12 funds in two Luxembourg SICAVs (a Part I-UCITS and a Part II).

If you would like more information about QUAERO Capital then please go to

About Philip Best and Marc St John Webb

Philip Best co-founded QUAERO CAPITAL SA in 2005 as a Partner and Fund Manager. Philip started his career as a fund manager at Warburg Investment Management in 1983. He joined QUAERO CAPITAL SA (formerly Argos Investment Managers SA) in January 2003 and launched The Argonaut Fund (a microcap fund) later that year. Born in 1960, Philip graduated from Oxford University in 1982 and worked in London for six years before moving to Paris in 1988 and then to Geneva in 2003.

Marc St John Webb is a Partner at QUAERO Capital and co-manager of The Argonaut Fund. He launched The Family Enterprise Fund (a small/mid cap European fund) in 2007. He has over 25 years’ experience of investing in European equities. In 1997, he joined CCF Elysées Bourse as Head of the Small Caps Division, where he developed a new research product dedicated to smaller companies. He oversaw several IPO’s and raised further capital for listed smaller companies.

Compliance Notes

This article is specifically provided for use by media representatives in the UK. The views expressed are those of the fund manager at the time of writing, and may have since changed. Although the best available sources are employed, there is no guarantee as to the accuracy of information presented in this document. The article is for information only and should not be construed in any way as a purchase or sales recommendation. The analyses and conclusions detailed in this publication may be revised at any time. Past performance does not guarantee or predict future performance.

The information provided is copyright of QUAERO Capital SA - a public limited company (société anonyme) under the laws of Switzerland on 22 April 2005. Its registered office is situated at Route de Pré-Bois 20, Case Postale 1875, CH-1215 Geneva 15, Switzerland. The company is regulated as an Asset Manager of Collective Investment Schemes by the Swiss Financial Market Supervisory Authority (FINMA).

QUAERO Capital (UK) Ltd, with its registered office at 33 St James’s Square SW1Y 4JS, London, United Kingdom (FRN No 609998), is an appointed representative of Sealark LLP, 103 Mount Street, London W1K2TJ (FRN No 512645). Sealark and QUAERO Capital (UK) are duly regulated by the Financial Conduct Authority (“FCA”). This information relating to this article and further important information concerning QUAERO Capital and the nature of the information provided can be read in full on the company’s website at


John Morgan, M.D. Fortuna Asset Management Communications Ltd. D: +44 (0)203 651 8925 M: +44 (0)7769 262272 EM: Web:

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