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Bull market characteristics persist in Europe

Valuations of European stockmarkets remain reasonably attractive, with a current aggregate rating at a level historically consistent with positive, low double-digit subsequent annualized performance.

The stock selection strategy of the Argos European Systematic Long Short Equity Fund is the result of a purely bottom-up analysis that exclusively relies on strict and objective financial criteria encompassing 1,700 western European companies.

The managers consider that technically, European indices continue to show many characteristics of a bull market. Recently, of the selected stocks held in the long leg of the strategy, 48% had a positive absolute price performance and 35% showed a price performance above that of the Stoxx 600 Europe index.

Five stocks rose by an average of +13%, representing the largest positive contributors to the strategy’s long leg performance. These were STMicroelectronics, Atos, Gurit, Outokumpu and Lloyds Banking Group.

STMicroelectronics continued its strong performance after announcing stronger than expected earnings and a favourable outlook for the year. Atos produced quality numbers for 2016 underpinned by a well-received three-year strategic plan. Gurit shares made up ground lost earlier in the year after clumsy communication to investors following 2016 results.

Outokumpu shares have continued to outperform in the wake of strong earnings, and compelling communication around the start of the implementation of their newest share buy-back programme.

The stocks with the most negative contribution to the Fund’s long leg monthly performance were Société Générale, BHP Billiton, Sacyr, Natixis and KappAhl. Société Générale, Natixis, and BHP Billiton gave back some of their previous extremely strong performance like many high beta, interest rates sensitive stocks.

Spanish construction company Sacyr, builder of the expansion of the Panama Canal, published an H2 2016 set of numbers showing a 13% rise in EBITDA, that nonetheless was accompanied by some profit taking after a 30% rise in the share price over the previous six months.

The portfolio strategy has so far favoured companies with their roots in countries with stable AAA sovereign ratings, according to both S&P and Moody's (i.e. Denmark, Germany, Netherlands, Norway, Sweden, Switzerland).

These countries’ overall economic environments support companies that generally benefit from low funding costs, pro-business and stable regulatory and fiscal policy, better governance, transparency, and Socially Responsible practises.

The firms tend to have a productive workforce and highly attractive domestic markets (with high GDP/capita ratios, low unemployment rates, and sophisticated customers attracted to innovative and high quality products and services).

In the event that sovereign debt issues re-ignite in Europe, these stocks would probably be less directly impacted than those based in less attractive countries.

All these factors can be considered as competitive advantages over the very long term over competitors based in less advanced countries elsewhere in Europe or in the world.


Notes to Editors

About QUAERO Capital

QUAERO Capital is an independent Swiss fund management firm founded in 2005 as “Argos Investment Managers S.A”. Renamed in 2015, the firm’s approach is to identify and foster innovative, independently minded, investment teams who use original research to provide actively managed strategies to potential clients in the institutional and wholesale markets.

A team of 32 people includes 16 experienced investment professionals. It is a 100% employee-owned company. The main shareholders are Cristofer Gelli, Philip Best, Jean Keller and Thierry Callault. QUAERO 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 the Argos European Systematic Long Short Equity Fund, please go to

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. The article should not be construed in any way as a purchase or sales recommendation for the funds managed by each manager. The information provided is also not intended to be a substitute for any formal documentation relating to the underlying funds.

Investment in QUAERO funds must be based only on the prospectus, the key investor Information document, and the annual or semi-annual report, which may be obtained free of charge from the registered office of the SICAV. Past performance of any fund mentioned 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

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