Catalan crisis sparks equity buying spree in classic ‘value’ move by azValor asset management duo.

The heavy fall in Spanish equities during the Catalan confrontation has led to a classic ‘value’ buying spree at Spanish value manager azValor.

In a classic ‘value’ move by veteran investors Alvaro Guzman and Fernando Bernad, azValor sharply switched out of a 22% cash position in its Iberian portfolio earlier this year, down to less than 5% by the beginning of November, as other shareholders sold out of quality Spanish companies.

The ‘value grab’ has boosted the long-term upside potential value of the Iberian fund by 55% up from 40% - so giving an indicative value of up to €200 per share. Guzman and Bernad point out that while nothing is guaranteed, were the value that they perceive in the portfolio to be realised, then over a three-year period, investors would receive a 15% annual compound return from the current market value of €130 - or 9% if value is realised over five years.

The duo’s focus for new investment has been in Iberian stocks such as Almirall, FCC and Jeronimo Martins, while increasing the weight in Technicas Reunidas.

In their most recent quarterly newsletter to clients – which aims to educate investors in the rigorous disciplines of the value style of management - senior partner Alvaro Guzman readily admits that they are “not infallible” in their search for long term value to be generated from such investments. However, in highlighting azValor’s investment processes he points to Austrian Economist Ludwig von Mises who wrote in his thesis ‘Human Action’:

“All that man can do is submit all his theories again and again to the most critical re-examination. It cannot be contended that this procedure is a guarantee against error. But it is undoubtedly the most effective method of avoiding error.”

In the two years since azValor was founded, the rigorous investment approach adopted by Guzman and Bernad has been paying off as the Iberian Portfolio has returned +30% - some 50% up on the lows reached up by the fund in 2016.

Notes to Editors

1. azValor

azValor is an independent Spanish asset management boutique, founded by a group of experienced investment professionals, who adopt a high conviction Value investing philosophy. The firm’s goal is that of a classic value investment house, that is, to maximise long-term returns on investments and minimise the risks of permanent losses. Set up in 2016, azValor has four funds, accounting for some €1.7 billion assets under management. The Value approach involves exhaustive analysis of stocks within a defined universe to uncover good businesses with sustainable competitive advantages and a high return on capital employed. As value investors, Managers seek companies whose intrinsic value is not reflected in their share price and which are managed by teams that look after the interests of shareholders. Crucially, AzValor managers are co-invested with clients, ensuring a true alignment of interests.

For more information about azValor Asset Management, please go to www.azvalor.com.

2. Compliance Notes

The information provided is copyright of azValor Asset Management SGIIC, S.A.U. whose registered office is Pº de la Castellana 110 – 3ª planta, 28046 Madrid.

azValor Asset Management SGIIC, S.A., as well as the products and services it provides, are subject to the legislation in force and under the supervision of the Spanish funds regulator Comisión Nacional de Mercado de Valores (CNMV) and other regulatory bodies.

This communication is specifically written for use only by journalists. It has been prepared solely for information purposes and is not a solicitation, or an offer to buy or sell any security. The information on which the document is based has been obtained from sources that we believe to be reliable, and in good faith, but we have not independently verified such information and no representation or warranty, express or implied, is made as to their accuracy. All expressions of opinion are subject to change without notice and the views expressed are those of the fund manager at the time of writing, and may have since changed.

Please note that the prices of mutual funds and shares, and the income from them, can fall as well as rise and you may not get back the amount originally invested. This can be as a result of market movements and also of variations in the exchange rates between currencies. Past performance does not guarantee or predict future performance.

azValor accepts no liability or responsibility whatsoever for any consequential loss of any kind arising out of the use of this document or any part of its contents. The use of this document should not be regarded as a substitute for the exercise by the recipient of his or her own judgment.

For further information please contact :

John Morgan, Managing Director

Fortuna Asset Management Communications

Tel: 07769 262272

Email: john@fortunaamc.co.uk

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