News

Group subsidiaries: economic vision, press releases, newsletters, interviews, etc.

Chahine Capital

Investment Monthly Report
July 2024

8 July 2024

The blow of the dissolution of the French National Assembly mainly weighed on French stocks (MSCI France NR -6.3% in June), and more modestly on European indices (MSCI Europe NR -1.0%). US indices, meanwhile, continued to rise (MSCI USA NR +3.5%). Is this troubled electoral context likely to throw the global economy off course? In our view, this is unlikely. On the one hand, previous election-related shocks have not had a lasting impact on the trend, as was the case with the election of Donald Trump, the Brexit vote or the rise to power of populist parties in Europe. Furthermore, the scenario in France of an absolute majority for a coalition of the « extremes » seems to be receding, as is the risk of a budgetary breakdown in the Eurozone’s 2nd largest economy. Fundamentals should therefore once again support the equity asset class, once the economic turmoil has passed. The global economic momentum remains robust, the Fed is poised to cut interest rates in the wake of the ECB, and valuations remain attractive, both in Europe and in the United States for most stocks, while the earnings momentum is currently positive.

Digital Stars Europe Acc posted a monthly performance of -2.1%, vs. -1.0% for the MSCI Europe NR. The fund is up +11.6% YTD, beating its index by +2.5%. Technology (ASM Int’l, SÜSS MicroTec, BESI, SAP, ASML) and healthcare (UCB, Ypsomed) were the only two positive sectors this month, both in the fund and in the market, but their underweight and our remaining cyclical positioning penalised the fund in relative terms. The troubled electoral environment weighed on all the small and mid caps, which are currently well represented in the portfolio.
The portfolio reviews carried out in June were diversified, increasing significantly our positions in the consumer staples and discretionary sectors, as well as in IT. Among the exits were mainly energy stocks, as well as healthcare and media stocks. France, already heavily underweight, has seen its weight further reduced.
Digital Stars Europe is significantly overweight industry. The fund is underweight healthcare, consumer discretionary and consumer staples.
Italy (largest overweight) remains the fund’s top weight at 16.0%, ahead of the UK at 15.3% and Germany at 10.4%.

Digital Stars Continental Europe Acc ended June at -2.3%, vs. -1.1% for the MSCI Europe ex UK NR. The fund is up +11.3% YTD, beating its index by +2.6%. Technology (ASM Int’l, SÜSS MicroTec, BESI, SAP, ASML) and healthcare (UCB) were the only two positive sectors this month, both in the fund and in the market, but their underweight and our remaining cyclical positioning penalised the fund in relative terms. The troubled electoral environment weighed on all the small and mid caps, which are currently well represented in the portfolio.
The portfolio reviews carried out in June were diversified, increasing significantly our positions in consumer staples and discretionary, as well as in industrials. Among the exits were mainly energy stocks, as well as healthcare and media stocks. France, already heavily underweight, has seen its weight further reduced.
Digital Stars Continental Europe is overweight in industry, as well as in real estate. The fund is underweight healthcare and consumer staples.
Italy (largest overweight) is still the fund’s top weight at 18.1%, ahead of Germany at 13.3% and Sweden at 10.6%.

Digital Stars Eurozone Acc posted a monthly performance of -3.2%, vs. -2.5% for the MSCI EMU NR. The fund is up +12.8% YTD, beating its index by +4.5%. The fund suffered from its ‘all-cap’ positioning, partially offset by its underweight positions in France and energy.
The portfolio reviews carried out in June saw the integration of finance stocks, as well as materials. On the outgoing side, the media and consumer discretionary sectors.
The media sector remains the largest overweight, ahead of consumer discretionary and real estate. The fund is underweight in consumer staples, utilities, energy and healthcare.
France remains the largest country weight at 21.3%, followed by Italy at 19.4% and Germany at 18.0%. Italy remains the fund’s most overweight country, and Germany the most underweight with France.

Digital Stars Europe Smaller Companies Acc ended up at -1.6% in June, outperforming by +1.8% the MSCI Europe Small Cap NR (at -3.3%). The fund is up +11.4% YTD, beating its index by +6.4%. Positive publications from several of our stocks (XPS Pensions Group, CMC Markets) enabled the fund to outperform the index, despite a few disappointments.
The monthly portfolio reviews have strengthened our positions in the finance and healthcare sectors. Sales occurred mainly in materials and real estate sectors. The weight of Sweden was significantly reduced.
The portfolio is now mainly overweight in industrials, IT and healthcare, and underweight in finance, real estate and consumer discretionary.
The UK (largest underweight) becomes the largest country weight at 17.4%, ahead of Sweden at 15.8% and Italy (most underweight country) at 12.5%.

Digital Stars US Equities Acc USD ended up at -1.4% in June, vs. +3.5% for the MSCI USA NR and -1.3% for the MSCI USA Small Cap NR. The fund is up +9.5% YTD, vs. +14.6% for its index and +1.8% for the MSCI USA Small Cap NR. The excellent performance of the “Magnificent 7” buoyed the index, accounting for most of the fund’s underperformance.
The latest monthly portfolio review mainly increased the positions in the real estate, energy and materials sectors, and reduced mainly those consumer discretionary and finance sectors.
The portfolio is significantly overweight in consumer discretionary and industry, as well as in finance. The most underweight sectors are IT, media and healthcare.

Chahine Capital

Macro update – July 2024

3 July 2024

Chahine Capital

Investment Monthly Report
May 2024

10 June 2024

Numerous macro and microeconomic tailwinds supported the equity markets in May (MSCI Europe NR +3.3%, MSCI USA NR +4.7%). Good earnings reports reassured investors and highlighted the attractive valuations in Europe and the United States for the vast majority of listed companies. In addition, the drop in oil prices in May led to a fall in inflation expectations on both sides of the Atlantic, reinforcing the central scenario of an imminent rate cut by the ECB, before the Fed follows suit in September. Even if seasonality becomes less buoyant, it still seems premature to reduce equity exposure and may even be costly to stay away from equity markets, despite the recent rise in equity indices. All the more so as some market segments (small and mid caps) have been lagging significantly for many months, leading to a valuation discount, and this could support the prospects for the relative performance of our active ‘Momentum’ Digital Stars strategy.

Digital Stars Europe Acc posted a monthly performance of +5.1%, outperforming by +1.8% the MSCI Europe NR (+3.3%). The fund is up +14.0% YTD, beating its index by +3.8%. Our overweight positions in industry and finance helped the fund this month, as did our underweight position in consumer discretionary (particularly luxury goods). More importantly, however, it was the good earnings reports from many of our companies (Buzzi, Prysmian, Indra Sistemas, Camurus) that enabled us to widen the gap, despite a few disappointments.
The portfolio reviews carried out in May were diversified, increasing significantly our positions in the industry, as well as in the consumer discretionary sectors. Among the exits were mainly finance, IT and real estate stocks. The weight of Sweden was significantly decreased.
Digital Stars Europe is significantly overweight industry, and slightly overweight finance and real estate. The fund is underweight healthcare, consumer staples and consumer discretionary.
Italy (largest overweight) remains the fund’s top weight at 16.9%, ahead of the UK at 15.2% and Germany at 8.0%.

Digital Stars Continental Europe Acc ended May at +5.3%, outperforming by +1.6% the MSCI Europe ex UK NR (+3.6%). The fund is up +13.9% YTD, beating its index by +4.0%. Our overweight position in industry helped the fund this month, as did our underweight position in consumer discretionary (particularly luxury goods). More importantly, however, it was the good earnings reports from many of our companies (Buzzi, ALK-abello, Camurus, Prysmian, Indra Sistemas) that enabled us to widen the gap, despite a few disappointments.
The portfolio reviews carried out in May were diversified, increasing significantly our positions in industry, as well as in materials. Among the exits were mainly stocks in the finance, real estate and IT sectors. The weight of Sweden was significantly decreased.
Digital Stars Continental Europe is overweight in industry, as well as in real estate. The fund is underweight healthcare, consumer staples and consumer discretionary.
Italy (largest overweight) is still the fund’s top weight at 18.7%, ahead of Germany and Sweden at 11.4%.

Digital Stars Eurozone Acc posted a monthly performance of +5.4%, outperforming by +2.6% the MSCI EMU NR (+2.7%). The fund is up +16.5% YTD, beating its index by +5.4%. The fund benefited from its all-cap positioning and from its underweight in energy. The underweight in luxury goods also helped, thanks in particular to the underperformance of LVMH, absent from the portfolio. More importantly, however, it was the good earnings publications from some of our stocks (SÜSS MicroTec, Prysmian, ANIMA HoldingIndra Sistemas, Camurus) that enabled us to widen the gap.
The rebalancing carried out in May saw the integration of IT stocks, as well as materials and media. On the outgoing side, the consumer discretionary, finance and industry sectors.
The media sector becomes the largest overweight, ahead of consumer discretionary and real estate. The fund is underweight in consumer staples, utilities, energy and healthcare.
France remains the largest country weight at 26.0%, followed by Italy at 20.0% and Germany at 15.5%. Italy remains the fund’s most overweight country, and Germany the most underweight with of France.

Digital Stars Europe Smaller Companies Acc ended up +6.1% in May, outperforming by +0.2% the MSCI Europe Small Cap NR (+5.8%). The fund is up +13.2% YTD, beating its index by +4.5%. Positive publications from several of our stocks (Ambea, SÜSS MicroTec, Buzzi, Heijmans) enabled the fund to outperform the index, despite a few disappointments.
The monthly portfolio reviews have strengthened our positions in the IT and healthcare sectors. Sales occurred mainly in consumer discretionary sector. The weight of Italy was significantly decreased.
The portfolio is now mainly overweight in industrials and IT, and underweight in finance, real estate and consumer discretionary.
Sweden (one of the two most overweight countries, along with Italy) is still the biggest country weight in the portfolio and weighs 17.6%, ahead of the UK (most underweight country) at 17.3% and Italy at 12.6%.

Digital Stars US Equities Acc USD was up +6.5% in May, outperforming by +1.8% both the MSCI USA NR (+4.7%) and the MSCI USA Small Cap NR (+4.7%). The fund is up +11.0% YTD, beating its index by +0.3%. Positive publications from several of our stocks (Abercrombie & Fitch, Gap, AppLovin, SEMrush, e.l.f. Beauty) enabled the fund to outperform the index, despite a few disappointments.
The latest monthly portfolio review mainly increased the positions in the healthcare, IT and consumer discretionary sectors, and reduced mainly those real estate sector.
The portfolio is significantly overweight in consumer discretionary and industry, as well as in finance. The most underweight sectors are IT, media and healthcare.

Chahine Capital

Investment Monthly Report
April 2024

13 May 2024

Equity indices retreated in April (MSCI Europe NR -0.9%, MSCI USA NR -4.2%), temporarily interrupting the impressive bull run that began at the end of October, despite quarterly publications getting off to a great start. Investors preferred to focus on the resilience of inflation in the United States to challenge the consensus view that central banks will cut interest rates in the near future. This corrects the over-optimistic expectations of rate cuts at the start of the year, but does not call into question the fact that this accommodative process will soon get underway, particularly in the Eurozone.
In mid-April, macroeconomic uncertainty sowed doubts in investors’ minds about the ability to keep inflation under control. Then the markets rallied, particularly in small and mid caps, which are well represented in our all-cap strategies. Overall, the best-performing sectors were energy and the defensive sectors (healthcare, utilities and consumer staples). Against this backdrop, the Digital Stars funds ended the month outperforming their indices.

Digital Stars Europe Acc posted a monthly performance of -0.7% compared with -0.9% for the MSCI Europe NR. The disappointment in materials companies (Buzzi, CRH) was largely offset by the positive publications from our semiconductor stocks (Süss MicroTec, ASM International). But it was industrials that contributed most to the outperformance, particularly those linked to energy (Höegh Autoliners, MaireTecnimont).
The portfolio reviews carried out in April were diversified, increasing significantly our positions in the industry and materials sectors, as well as in the media. Among the exits were mainly consumer discretionary, bank and insurance stocks. The weight of the UK was increased, unlike Sweden.
Digital Stars Europe is overweight industry, finance and real estate. The fund is underweight healthcare, consumer staples and consumer discretionary.
Italy (largest overweight) remains the fund’s top weight at 17.5%, ahead of the UK at 15.4% and Sweden at 9.0%.

Digital Stars Continental Europe Acc ended April at -1.0% compared with -2.0% for the MSCI Europe ex UK NR. The fund benefited from the performance of the energy sector through its overweight position (Galp Energia) and via its exposure to stocks such as Höegh Autoliners and MaireTecnimont. The disappointment in building materials companies (Buzzi, CRH) was largely offset by the good news from our banks (BPER, Banco de Sabadell, CaixaBank) and semi-conductors (Süss MicroTec, ASM International).
The portfolio reviews carried out in April were diversified, increasing significantly our positions in industry, as well as in materials. Among the exits were mainly stocks in the finance sectors: banking and insurance.
Digital Stars Continental Europe is overweight in industry, as well as in real estate. The fund is underweight healthcare, consumer staples and consumer discretionary.
Italy (largest overweight) is still the fund’s top weight at 18.5%, ahead of Sweden at 12.5% and Germany at 11.4%.

Digital Stars Eurozone Acc posted a monthly performance of +0.3% compared with -1.9% for the MSCI EMU NR. The fund benefited from its all-cap approach, as well as from good earnings announcements (SÜSS MicroTec). In addition, the poor performance of some large caps (ASML, LVMH) enabled the fund to finish the month +2.5% ahead of its benchmark.
The rebalancing carried out in April saw the integration of consumer discretionary stocks. On the outgoing side, the telecom sector is the most represented.
The consumer discretionary sector becomes the largest overweight, ahead of media and real estate. The fund is underweight in utilities, food, healthcare, energy and materials.
France remains the largest country weight at 26.7%, followed by Italy at 21.1% and Germany at 14.7%. Italy remains the fund’s biggest relative bet, and Germany becomes the fund’s biggest underweight, ahead of France.

Digital Stars Europe Smaller Companies Acc ended up +0.7% in April, vs. -0.8% for the MSCI Europe Small Cap NR. A number of good earnings announcements for some of our holdings (Höegh Autoliners, CMC Markets, etc.) enabled the fund to outperform its benchmark index.
The monthly portfolio reviews have strengthened our positions in the industry and IT sectors. Sales occurred mainly in real estate and consumer staples.
The portfolio is now mainly overweight in industrials and materials, and underweight in finance, real estate and energy.
Sweden (one of the two most overweight countries, along with Italy) is now the biggest country weight in the portfolio and weighs 18.2%, ahead of the UK at 16.5% and Italy at 16.1%.

Digital Stars US Equities Acc USD was down -5.4% in April, vs. -4.2% for the MSCI USA NR and -6.6% for the MSCI USA Small Cap NR. Despite a good performance from a number of mid-caps (Badger Meter, Haemonetics Corporation, etc.), the fund’s ‘all caps’ profile was impacted by the underperformance of the small and mid-cap segment. It therefore ended the month between the two indices.
The latest monthly portfolio review mainly increased the positions in the industry and consumer discretionary sectors, and reduced mainly those in IT and healthcare sectors.
The portfolio is significantly overweight in industry, as well as in consumer discretionary and finance. The most underweight sectors are IT, media and healthcare.

Chahine Capital

Macro update – April 2024

9 April 2024

Chahine Capital

Investment Monthly Report
March 2024

6 April 2024

Equity indices continued to rise in March (MSCI Europe NR +3.9%, MSCI USA NR +3.1%). The impressive rally that began last October is the logical consequence of a context in which a virtuous double inflection of the growth and monetary cycles is taking shape. The obvious undervaluation of indices from a fundamental point of view has been corrected. European indices are now priced close to their historical average. This is less true in the United States, where the S&P 500 index is overvalued, due to the high representation of the expensive « Magnificent » stocks. However, the small- and mid-cap segment, whose relative behaviour is traditionally pro-cyclical, remains at a discount on both sides of the Atlantic (MSCI USA Small Cap PER 18.5x vs. 20-year average of 19.2x, MSCI Europe Small Cap PER 13.4x vs. average of 14.7x) and could emerge as a good performance driver in the coming months.
The positioning of our funds (positive bets on real estate and finance, negative bets on defensives) enabled them to take advantage of the strong market in March, despite some disappointments on certain technology stocks. Against this backdrop, the Digital Stars funds ended the month outperforming their indices.

Digital Stars Europe Acc posted a monthly performance of +4.2% compared with +3.9% for the MSCI Europe NR. The overweight in the real estate and finance sectors benefitted the fund (Fastighets AB Balder, BPER, Banco de Sabadell, BBVA), as did the underweight in the consumer staples segment. A few disappointments on technology stocks weighed negatively, accentuating the sector’s relative underperformance.
The portfolio reviews carried out in March were diversified, increasing significantly our positions in the industry sector. Among the exits were mainly real estate, energy, utilities and consumer discretionary stocks.
Digital Stars Europe is overweight industry, finance and real estate. The fund is underweight healthcare and consumer staples.
Italy (largest overweight) becomes the fund’s top weight at 17.4%, ahead of the UK at 14.5% and Sweden at 10.7%.

Digital Stars Continental Europe Acc ended March at +4.2% compared with +3.7% for the MSCI Europe ex UK NR. The overweight in the real estate and finance sectors benefitted the fund (Fastighets AB Balder, BPER, Banco de Sabadell, BBVA), as did the underweight in the consumer staples segment. In the construction materials sector, a number of stocks stood out (Buzzi, Heidelberg Materials), while some technology stocks disappointed and added to the sector’s underperformance.
The rebalancings carried out in March were diversified, increasing significantly our positions in industry, as well as in finance and pharmaceuticals. Among the exits were mainly energy, utilities and communication services stocks.
Digital Stars Continental Europe is overweight real estate, finance and industry. The fund is underweight healthcare and consumer staples.
Italy (largest overweight) is still the fund’s top weight at 17.8%, ahead of Sweden at 14.4% and Germany at 12.1%.

Digital Stars Eurozone Acc posted a monthly performance of +4.3% compared with +4.4% for the MSCI EMU NR. The fund benefited from the same trends in absolute terms, but had to deal with some poor earnings announcements. However, the weak performance of some large caps (ASML, LVMH) enabled the fund to finish the month in line with its benchmark.
The rebalancing carried out in March saw the integration of financial, paper and real estate stocks. On the outgoing side, the technology sector is the most represented.
The media sector remains the top relative bet of the fund, which is also overweight in the consumer discretionary and real estate sectors. The fund is underweight in utilities, food, healthcare, energy and materials.
France remains the largest country weight at 24.7%, followed by Italy at 21.1% and Germany at 16.7%. Italy remains the fund’s biggest relative bet, and France the fund’s biggest underweight.

Digital Stars Europe Smaller Companies Acc ended up +3.6% in March, vs. +4.3% for the MSCI Europe Small Cap NR. A number of good results announcements for some of our stocks (CMC Markets, Maire Tecnimont) partly offset more disappointing reports earlier in the month (Clas Ohlson, Mota Group).
The monthly portfolio reviews have strengthened our positions in the industry and healthcare sectors. Sales occurred mainly in energy, telecommunications, consumer discretionary and IT.
The portfolio is now mainly overweight in industrials, materials and consumer staples, and underweight in finance and energy.
Sweden (one of the two most overweight countries, along with Italy) is now the biggest country weight in the portfolio and weighs 21.1%, ahead of Italy at 17.0% and the United Kingdom (the most largely underweight country) at 16.8%.

Digital Stars US Equities Acc USD was up +3.5% in March, vs. +3.1% for the MSCI USA NR and +3.8% for the MSCI USA Small Cap NR. The US market performed fairly homogeneously this month. It was the behaviour of individual stocks that made the difference, thanks to positive announcements from some of our portfolio holdings, like GAP, Honest Company.
The latest monthly portfolio review mainly increased the positions in the media and real estate sectors, and reduced mainly those in industry, materials and consumer discretionary sectors.
The portfolio is significantly overweight in industry, as well as in consumer discretionary and finance. The most underweight sectors are IT, media and healthcare.

Chahine Capital

Investment Monthly Report
February 2024

11 March 2024

The market made further progress in February (MSCI Europe NR +1.9%, MSCI USA NR +5.3%). The resilience of global economic momentum is leading to upward revisions of GDP growth expectations, and this is proving to be a powerful support for cyclical assets, including equities. This is all the more buoyant given that it has taken many investors by surprise. At the same time, earnings releases also came as a positive surprise, with margins well above expectations. For the 4th quarter, earnings for S&P 500 companies were +7.2% above expectations, and +3.8% for STOXX Europe 600 stocks. All we can do now is hope that the resilience of the economy does not call into question the accommodative pivot of the central banks, which is still expected in 2024, albeit in a more nuanced way than at the start of the year.

The relative pressure on interest rates logically benefited our financial stocks (BPER, Wise, Unipol Gruppo) during the month, and penalised the real estate sector, well represented in the portfolios. Semiconductor and luxury goods stocks were also among the best contributors. Earnings announcements usually support our Momentum approach, and this month’s good publications from our holdings (Höegh Autoliners, Sulzer, Royal Vopak, GTT) made a positive contribution to our funds as a whole. Against this backdrop, the Digital Stars funds ended the month outperforming their indices. Digital Stars Europe Acc posted a monthly performance of +2.7% compared with +1.9% for the MSCI Europe NR. Digital Stars Continental Europe Acc ended February at +3.1% compared with +2.4% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc posted a monthly performance of +1.9% compared with +3.3% for the MSCI EMU NR. The fund benefited from the same trends in absolute terms, but was adversely affected in relative terms by the high concentration of the index on the month’s key drivers.

 

The portfolio reviews carried out in February were diversified, increasing our positions in the industry, healthcare and finance sectors. Among the exits were mainly consumer staples, materials and IT stocks.

Digital Stars Europe is overweight finance, industry and real estate. The fund is underweight healthcare and consumer staples.

The UK is still the fund’s top weight at 16.9%, ahead of Italy at 16.2% (largest overweight) and Germany at 9.8%.

Digital Stars Europe Smaller Companies Acc ended up +1.4% in February, vs. 0.0% for the MSCI Europe Small Cap NR. Earnings announcements have supported the fund over the month (BAM Groep, SAF-Holland, Fugro). The good performance of growth stocks, well represented in the portfolio, outweighed the poor performance of the real estate sector.

The monthly portfolio reviews have strengthened our positions in the healthcare and IT sectors. Sales occurred mainly in industry, consumer staples and energy.

The portfolio is now mainly overweight in materials and consumer staples, and underweight in finance and healthcare.

Sweden, largest country overweight, is now the biggest country weight in the portfolio and weighs 20.6%, ahead of the United Kingdom (the most largely underweight country) at 15.1% and Italy (2nd largest country overweight) at 13.3%.

 

Digital Stars US Equities Acc USD was up +6.2% in February, vs. +5.3% for the MSCI USA NR and -5.3% for the MSCI USA Small Cap NR. The US market performed fairly homogeneously this month. It was the behaviour of individual stocks that made the difference, thanks to positive announcements from some of our portfolio holdings, like e.l.f. Beauty or AppLovin.

The latest monthly portfolio review mainly increased the positions in consumer discretionary, consumer staples, as well as in finance, and reduced mainly those in IT and real estate sectors.

The portfolio is significantly overweight in industry, as well as in consumer discretionary and finance. The most underweight sectors are IT, media and pharmaceuticals.

 

Chahine Capital

Investment Monthly Report
January 2024

7 February 2024

The macro environment continues to be favourable for equities (MSCI Europe NR +1.6%, MSCI USA NR +1.5% in January). Economic momentum is still picking up in all regions. Moreover, the central banks are still expected to complete their monetary pivot in the first half of 2024, despite Mr Powell’s less generous comments at the end of the month. In this context, interest rates rose in January, which did not help the small and mid cap segment in relative terms. Surprisingly, given the rising interest rates and climbing indices, it was the defensive Visibility stocks that stood out, while Value stocks underperformed. The start of the announcement period largely explains this phenomenon. In Europe, for example, ASML Holding and LVMH, two of the biggest names listed on the stock market, climbed by +17.1% and +5.5% respectively in January on the back of well-received quarterly results. Could this finally be the sign of a return to fundamentals, more favourable to stock-pickers? It is likely and bodes well for our active management approach.

Small and mid caps suffered from the relative pressure on interest rates during the month. However, this movement benefited all of our Value segment, in particular financial stocks, which are overweighted in our funds, via Italy in particular. In addition, our selection in the materials sector made a significant contribution to January’s performance, thanks in particular to cement companies (CRH PLC, Buzzi Spa). Against this backdrop, the Digital Stars funds ended the month slightly ahead of their indices. Digital Stars Europe Acc posted a monthly performance of +2.1% compared with +1.6% for the MSCI Europe NR. Digital Stars Continental Europe Acc ended January at +1.8% compared with +1.9% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc posted a monthly performance of +3.7% compared with +2.2% for the MSCI EMU NR.

 

The portfolio reviews carried out in January were diversified, increasing our positions in the healthcare, industry and IT sectors. Among the exits were mainly consumer discretionary, bank and energy stocks. The overweight of banking stocks in Digital Stars Europe is now at 3.3%.

Digital Stars Europe is overweight financials, real estate and industrials. The fund is underweight healthcare and consumer staples.

The UK is still the fund’s top weight at 19.8%, ahead of Italy at 14.3% (largest overweight) and Germany at 11.0%.

 

Digital Stars Europe Smaller Companies Acc ended up +0.8% in January, vs. -0.9% for the MSCI Europe Small Cap NR. Small and mid-caps suffered from the relative pressure on interest rates, but this movement benefited our entire Value segment, particularly our Italian banks. Our materials stocks made a significant contribution to January’s performance, as did our industrials.

The monthly portfolio reviews have strengthened our positions in the communication services, real estate and healthcare sectors. Sales occurred mainly in consumer discretionary, energy and finance.

The portfolio is now mainly overweight in consumer staples, materials and communication services, and underweight in finance, healthcare and IT.

The United Kingdom is the biggest country weight in the portfolio and weighs 17.3% (but remains the most largely underweight country), ahead of Sweden at 15.3% and Italy at 12.5% (2nd largest country overweight).

 

Digital Stars US Equities Acc USD was up +0.2% in January, vs. +1.5% for the MSCI USA NR and -3.5% for the MSCI USA Small Cap NR. Small and mid caps suffered from the relative tension on interest rates during the month, as well as from Mr Powell’s ‘hawkish’ speech on 31 January. Our underweight position in the communications services and information technology sectors did not pay off, nor did our selection within financial stocks. Some individual stocks in the IT and consumer sectors made a positive contribution to performance.

The latest monthly portfolio review mainly increased the positions in consumer discretionary, as well as in finance, real estate and media, and reduced mainly those in IT and industry sectors.

The portfolio is significantly overweight in industry, as well as in consumer discretionary and finance. The most underweight sectors are IT, media and pharmaceuticals.

Chahine Capital

Investment Monthly Report
December 2023

1 January 2024

Equity indices closed December on a high note (MSCI Europe NR +3.7%, MSCI USA NR +4.7%), with 2023 remaining an excellent year for investors (MSCI Europe NR +15.8%, MSCI USA NR +26.1%). The monetary catalyst unveiled in November has played out over an extended period. Investors are still betting on a reversal in monetary policy in the near future. Rate cuts are expected as early as the first half of 2024. In this context, the yield curve as a whole eased in December, boosting equity indices, particularly small- and mid-cap ones (MSCI Europe Small NR +7.0%, MSCI USA Small +11.3%).

The easing in bond yields has benefited the profile of our funds, which are overweight in the cyclical real estate and industrial sectors, and underweight in the more defensive healthcare and consumer staples sectors. However, this has not compensated for the impact of the bond yields on some of our banks, especially in southern Europe (BPER, Banco BPM, Banco de Sabadell). Against this backdrop, the Digital Stars funds ended the month underperforming their indices. Digital Stars Europe Acc posted a monthly performance of +3.3% compared with +3.7% for the MSCI Europe NR. Digital Stars Continental Europe Acc ended December at +2.7% compared with +3.8% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc posted a monthly performance of +3.5% compared with +3.2% for the MSCI EMU NR.

 

The portfolio reviews carried out in December were diversified, increasing our positions in the real estate and industry sectors. Among the exits were mainly financials and consumer discretionary stocks. The overweight of banking stocks in Digital Stars Europe is now at 4.5%.

Digital Stars Europe is overweight financials, real estate and industrials. The fund is underweight healthcare and consumer staples.

The UK is still the fund’s top weight at 21.9%, ahead of Italy at 13.7% (largest overweight) and Germany at 12.0%.

 

Digital Stars Europe Smaller Companies Acc ended up +3.9% in December, vs. +7.0% for the MSCI Europe Small Cap NR. The fund benefited from the rally of the small caps, but was held back in particular by banks, which were affected by the easing of the yield curve, and by industrials.

The monthly portfolio reviews have strengthened our positions in the materials, IT, real estate and food sectors. Sales were mainly in consumer discretionary, industrials and financials.

The portfolio is now mainly overweight in consumer staples, energy and materials, and underweight in finance, healthcare and IT.

The United Kingdom is the biggest country weight in the portfolio and weighs 19.0% (but remains the most largely underweight country), ahead of Sweden at 13.3%, which stands now ahead of Italy at 13.1% (now the largest country overweight).

 

Digital Stars US Equities Acc USD was up +7.9% in December, outperforming the MSCI USA NR at +4.7% and the MSCI USA Small Cap NR at +11.3%. The outperformance is mainly due to the fund’s exposure to small and mid caps and to value/cyclical stocks, in particular regional banks, personal care products and industrial companies.

The latest monthly portfolio review mainly increased the positions in financials, as well as in real estate and consumer discretionary, and reduced mainly those in IT and industry sectors.

The portfolio is significantly overweight in industry, as well as in banks. The most underweight sectors are IT, media, and pharmaceuticals.

Chahine Capital

Investment Monthly Report
November 2023

8 December 2023

Equity indices rose strongly in November (MSCI Europe NR +6.4%, MSCI USA NR +9.4%). The good inflation figures were reassuring, as was the fact that, from a fundamental point of view, corporate margins remained at a high level after the release of the 3rd quarter results.
We may be at the crossroads of two virtuous inflections. That of the monetary cycle, with the first rate cuts expected in the 1st half of 2024, combined with that of the growth cycle, with both sides of the Atlantic at the bottom of the cycle and a gradual improvement in activity expected. In addition, indices are attractively valued in both Europe and the United States, if we exclude the « magnificent 7 ».
The positive news on inflation was well received by investors: the markets rallied strongly, particularly small and mid caps, which are well represented in the funds. Semiconductors (ASM Int’l, BESI, Aixtron) have benefitted from the easing in long-term bond yields. Our underweight position in defensive stocks (healthcare and consumer staples) boosted our funds in relative terms, as did our position in financials (BPER), particularly UK stocks (3i Group, Wise) whose good publications were welcomed by the market. Against this backdrop, the Digital Stars funds ended the month outperforming their indices. Digital Stars Europe Acc posted a monthly performance of +7.6% compared with +6.4% for the MSCI Europe NR. Digital Stars Continental Europe Acc ended November at +7.8% compared with +7.4% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc posted a monthly performance of +9.1% compared with +7.9% for the MSCI EMU NR.

The portfolio reviews carried out in November were diversified, increasing our positions in the real estate and financial sectors. Among the exits were IT, industry and healthcare stocks. The overweight of banking stocks in Digital Stars Europe is now at 5.8%.
Digital Stars Europe is overweight financials, real estate and industrials. The fund is underweight healthcare and consumer staples.
The UK is still the fund’s top weight at 19.5%, ahead of Italy at 14.6% (largest overweight) and Germany at 12.3%.

Digital Stars Europe Smaller Companies Acc ended up +6.9% in November, vs. +9.0% for the MSCI Europe Small Cap NR. IT stocks (X-Fab, Hanza) contributed the most, while the negative returns of stocks linked to energy (Okeanis Eco Tankers, Odfjell Drilling, Höegh Autoliners) restrained the rally of small-caps.
The monthly portfolio reviews have strengthened our positions in the real estate and media sectors. Sales were mainly in healthcare and consumer staples.
The portfolio is mainly overweight in consumer discretionary, consumer staples and energy, and underweight in healthcare, IT and financials.
The United Kingdom is the biggest country weight in the portfolio and weighs 23.3% (but remains the most largely underweight country), ahead of Italy at 12.1%. Greece is still the most overweight country at 8.4%.

 

Digital Stars US Equities Acc USD was up +10.7% in November, outperforming the MSCI USA NR at +9.4% and the MSCI USA Small Cap NR at +9.0%. The fund’s outperformance comes from the exposure to small and mid caps. Some construction-related industrial stocks performed well (Simpson Manufacturing, Builders FirstSource, Boise Cascade), as did a number of technology stocks (Workday, SolarWinds, Palo Alto Networks).
The latest monthly portfolio review mainly increased the positions in financials and utilities, and reduced those in IT and industry sectors.
The portfolio is significantly overweight in industry. The most underweight sectors are IT, media, and pharmaceuticals.

Chahine Capital

Chahine Capital continues to expand internationally

20 November 2023

After announcing the strengthening of its research teams last month, Chahine Capital is pursuing its growth strategy in Europe with the appointment of Gerardo Coppola and Andreas Schneeberger as Sales Managers for Italy and Germany & Austria respectively.
Drawing on its proprietary quantitative investment models which are remarkable with over 25 years of track record, the company now markets its range of funds out of 4 European countries: Luxembourg, France, Germany and Italy.

 

« Andreas and Gerardo have been appointed to strategic countries for the development of Chahine Capital’s funds, in order to be ever closer to our clients; our company will be able to benefit from their solid commercial expertise and the networks they have built up during their respective careers. Our teams are delighted to welcome them; Chahine Capital is showing ambition in Equity markets that offer good prospects for quantitative investment; it’s important to be prepared!” – emphasizes Charles Lacroix, Chief Executive Officer at Chahine Capital.

Andreas Schneeberger is appointed Sales Manager Germany & Austria

Andreas Schneeberger is in charge of promoting Chahine Capital’s range of funds in Germany and Austria, areas in which he has built up trusting relationships with numerous investors over the past 20 years. Based in Frankfurt, Andreas was until last October Head of Development Germany / Austria at Generali Investments.

Andreas Schneeberger was fund of funds manager at DekaBank (Frankfurt) from 1994 to 2002. He then held sales positions at INVESCO Service GmbH and Societe Generale Asset Management (Frankfurt, 2005-2010), before working as an investment consultant for Bank Gutmann AG (Vienna, 2010-2013). Returning to Frankfurt in 2014, Andreas became senior sales representative for Germany/Austria at Aquilla Capital Asset Management, before being appointed Head of Development Germany/Austria (2015-2020) at Danske Bank Asset Management and FEfundinfo AG, before joining Generali Investments in 2021.

Andreas Schneeberger is a certified member of the DVFA program (CSIP – Certified Senior Investment Professional Frankfurt, 2018) and holds a degree in Economics from Klinger Academy (1985).

Gerardo Coppola is appointed Senior Sales Manager Italy

Gerardo is in charge of promoting Chahine Capital’s range of funds in Italy. Based in Milan, he was previously Head of Distribution at BNP Paribas REIM SGR.

Gerardo Coppola began his career in 2000 in Luxembourg, first with Lombard International Assurance and then with State Street Bank Luxembourg. In 2002, he became Country Manager – Italy at VITIS Life (Luxembourg) and, after 4 years, joint Cardif Lux Vie (2006-2014) as International director. In 2015, Gerardo left Luxembourg to Italy, where he became Senior Sales Manager at Edmond de Rothschild (Milan), before joining BNP Paribas REIM SGR (Milan) in 2021.

Gerardo Coppola graduated from Università degli Studi di Trieste in Economics and Business Administration (1992) and from Istituto Tecnico Commerciale Maffucci – Calitri (AV) in Accounting.

Chahine Capital

Investment Monthly Report
October 2023

5 November 2023

Equity indices fell in October (MSCI Europe NR -3.6%, MSCI USA NR -2.3%). This was the 3rd consecutive month of decline. The tragic events in the Middle East have led to a sharp rise in the geopolitical risk premium, which is weighing heavily on indices. As is often the case in such situations, fundamentals have been sidelined, but this may only be temporary. The initial lessons drawn from the quarterly publications are indeed encouraging. Despite mixed sales releases, signalling that consumer spending is being held back by inflation, earnings are surprisingly positive. Corporate margins are therefore stronger than expected, and index valuations are very low, especially in Europe. In addition, the sharp fall in inflation points to an accommodative inflection by central banks, probably as early as the 1st half of 2024, which could fuel an equity rally in the coming months.
Geopolitical tensions in the Middle East have fuelled risk aversion, affecting stock markets, particularly the small and mid caps to which we are exposed. But these tensions did also benefit energy-related stocks (BW LPG, TORM, Hoegh Autoliners). Our banks (Banco BPM, BPER, BCP), which represent our main sector bet, stood out positively from the rest of the sector, particularly in southern Europe. Against this backdrop, the Digital Stars funds ended the month down compared with their indices. Digital Stars Europe Acc posted a monthly performance of -4.4% compared with -3.6% for the MSCI Europe NR. Digital Stars Continental Europe Acc ended October at -4.1% compared with -3.4% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc posted a monthly performance of -6.9% compared with -3.3% for the MSCI EMU NR.

The rebalancings carried out in October were diversified, increasing our positions in the financial services, communication services, and real estate. Among the exits were materials (packaging), industry and consumer discretionary stocks. The overweight of banking stocks in Digital Stars Europe is now at 5.4%.
Digital Stars Europe is overweight financials and industrials. The fund is underweight healthcare and consumer staples. The UK is still the fund’s top weight at 18.9%, ahead of Italy at 14.9% (largest overweight) and Germany at 12.7%.

Digital Stars Europe Smaller Companies Acc ended down -4.9% in October, like all the small caps segment. But the fund outperformed the MSCI Europe Small Cap NR at -5.9%, thanks to our stocks linked to energy (Advance Gas Holding, BW LPG, Okeanis Eco Tankers), our banks (BPER, Banco BPM), and some real estate stocks (Aroundtown).
The monthly portfolio reviews have strengthened our positions in the energy sector, as well as in the industry and telecommunications. Sales were mainly in consumer discretionary and IT, as well as in health care.
The portfolio is still mainly overweight in consumer discretionary, energy and consumer staples, and underweight in IT, real estate and healthcare.
The United Kingdom is the biggest country weight in the portfolio and weighs 22.7% (but remains the most largely underweight country), ahead of Italy at 11.4%. Greece is still the most overweight country at 8.2%.

 

Digital Stars US Equities Acc USD was down -5.2% in October, underperforming the MSCI USA NR at -2.3% but ahead of the MSCI USA Small Cap NR at -6.3%. Exposure to small and mid-cap stocks explains the performance differential, as well as the correction of some companies that revised their guidance downwards.
The latest monthly portfolio review mainly increased the positions in industrials and financials, and reduced those in consumer discretionary sector.
The portfolio is significantly overweight in industry. The most underweight sectors are media, pharmaceuticals and IT (semiconductors).

Chahine Capital

Chahine Capital appoints new Chief Investment Officer

24 October 2023

Chahine Capital, a pioneer in quantitative Momentum equity investment, announces the appointment of Aymar de Léotoing as Chief Investment Officer (CIO). Aymar succeeds Julien Bernier, who has been with Chahine Capital since 2001 and with whom he has worked for the past 7 years. Chahine Capital’s quantitative research team has also been strengthened by the appointments of Julien Messias and Franck Salzard as Senior Quantitative Researcher and Quantitative Analyst respectively.

 

 

Aymar de Léotoing, Chief Investment Officer – Portfolio Manager

 

 

Aymar de Léotoing, Portfolio Manager at Chahine Capital since 2016, becomes CIO & Portfolio Manager.
Aymar began his career in 2000 as a consultant with JCF Group, before joining FactSet.

In 2007, he took up the position of Quantitative Analyst at Société Générale AM / Amundi, before joining Arkeon Finance and then Chahine Capital in 2016 as Portfolio Manager.

Aymar de Léotoing holds an engineering degree from ESTP Paris (1999). He holds a Certificate in Quantitative Finance (CQF, Fitch Learning/Wilmott) and has taught financial analysis at Neoma Business School Paris.

 

Julien Messias, Senior Quantitative Researcher

 

 

 

Julien Messias joins Chahine Capital as Senior Quantitative Researcher. He was previously Head of R&D and US Equities Quantitative Portfolio Manager at Quantology Capital Management, a quantitative investment manager he co-founded in 2013.

After experiences at BNP Paribas Arbitrage and Banque Fédérative du Crédit Mutuel, Julien Messias took up the position of Equity Derivatives Trader at ING in Belgium in 2008. In 2012, he became Life Reinsurance Pricing Actuary at PartnerRe, before setting up Quantology Capital Management the following year. Julien will join the Chahine Capital team on Dec 1st and will be based in Paris.

Julien Messias holds a Master2 Actuarial degree from CNAM (2017), a Master’s degree from ESSEC Business School Paris (2008) and a Master2 Research 104 from Université Paris IX Dauphine / ENSAE (2008). Julien is a certified actuary of the Institut des Actuaires; he has taught a Master1 (Applied Economics) at Université Paris IX Dauphine Paris and a Master (Quantitative Finance / Financial Markets) at Solvay Brussels School of Economics and Management.

 

 

Franck Salzard, Quantitative Analyst 

 

 

Franck Salzard has joined Chahine Capital’s research team as Quantitative Analyst and is based in Luxembourg. He holds an engineering degree in microelectronics and computer science from the Ecole des Mines de Saint Etienne (2023) and a Master’s degree in quantitative finance from IAE Grenoble.

Franck previously worked as an intern in the fund selection team at Banque de Luxembourg Investments (2023) and in securities data management at Banque de Luxembourg (2022).

 

« We are delighted to announce the appointment of Aymar de Léotoing as Chief Investment Officer at Chahine Capital. Aymar knows the company very well and has all the expertise and experience required to lead the Investment and Research teams, which are at the heart of a quantitative approach such as that implemented by Chahine Capital for over 25 years. This team has also been strengthened by the arrivals of Julien Messias, a very senior and seasoned professional, and Franck Salzard, an expert in data science », emphasizes Charles Lacroix, Chief Executive Officer at Chahine Capital.

Chahine Capital

Macro update – October 2023

17 October 2023

Chahine Capital

Investment Monthly Report
September 2023

11 October 2023

Equity indices retreated in September (MSCI Europe NR -1.6%, MSCI USA NR -4.7%), due to pressure on interest rates. The US 10-year sovereign yield reached 4.57% (vs. 4.10% at the end of August) and the German 3.84% (vs. 3.47%). Such levels had not been reached since 2007 in the US and 2011 in Germany, respectively. The cause of this brutal tension was the Fed, who took a surprisingly restrictive stance at its September meeting, and significantly toned down its rate cut projections for 2024. This dampened investors’ enthusiasm. However, the significance of this event should not be overestimated. Communication is an integral part of monetary policy, and the priority remains the fight against inflation, despite a trajectory that has been moving in the right direction since the summer 2022. It would not be surprising to see a shift in policy soon by central banks, which have no incentive to trigger a severe recession. In an environment dominated by negative news (rising oil prices, the beginnings of a US recession, a sluggish Chinese economy and restrictive rhetoric from central bankers), the slightest piece of good news could support the equity asset class, whose valuation remains attractive (particularly in Europe), and in our view already anticipates a moderate recession. In this respect, the quarterly publications due to start soon will be particularly closely watched.
The sharp rise in bond yields benefited banks (BPER, Jyske Bank), our main sector bet. The surge in oil prices was reflected in our energy-related stocks (TORM, Shoeller-Bleckmann, Technip Energies). But the rising yields have affected the equity markets in general, and small caps and growth stocks in particular, which are well represented in our portfolios. Against this backdrop, the Digital Stars funds ended the month down compared with their indices. Digital Stars Europe Acc posted a monthly performance of -2.8% compared with -1.6% for the MSCI Europe NR. Digital Stars Continental Europe Acc ended September at -2.9% compared with -2.5% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc posted a monthly performance of -4.0% compared with -3.2% for the MSCI EMU NR.

The rebalancings carried out in September were diversified, increasing our positions in the energy, construction materials and telecommunications sectors. Among the exits were IT and consumer discretionary stocks. The overweight of banking stocks in Digital Stars Europe is now at 5.0%.
Digital Stars Europe is also overweight financials and industrials. The fund is underweight healthcare and consumer staples. The UK is still the fund’s top weight at 19.4%, ahead of Italy at 15.1% (largest overweight) and Germany at 12.5%.

Digital Stars Europe Smaller Companies Acc ended down -3.3% in September, slightly behind the MSCI Europe Small Cap NR at -3.1%. Consumer discretionary was a drag on the fund (Jumbo, Dunelm), particularly the automotive sector (Piaggio, Aston Martin Lagonda). But the energy sector held up well (Okeanis Eco Tankers, Technip Energies).
The monthly portfolio reviews have strengthened our positions in the real estate sector, as well as in the energy and telecommunications. Sales were mainly in IT and consume staples, as well as in health care.
The portfolio is still mainly overweight in consumer discretionary, as well as in consumer staples, and significantly underweight in real estate.
The United Kingdom is the biggest country weight in the portfolio and weighs 23.2% (but remains the most largely underweight country), ahead of Italy at 12.3%. Greece is still the most overweight country at 8.5%.

 

Digital Stars US Equities Acc USD was down -6.0% in September, underperforming the MSCI USA NR at -4.7% and the MSCI USA Small Cap NR at -5.8%. The market drop particularly affected growth and cyclical stocks in the technology (semiconductors), consumer discretionary and industrial sectors.
The latest monthly portfolio review mainly increased the positions in the industry, and reduced those in the financial sector.
The portfolio is overweight in industry and consumer discretionary. Media is still the biggest underweight, before finance and pharmaceuticals.

Chahine Capital

Investment Monthly Report
August 2023

6 September 2023

While the resilience of the global economy had buoyed equity indices in July, they declined in August as long-term yields remained high. Furthermore, the latest macro-economic releases from China were disappointing. Against this backdrop, cyclical stocks and growth stocks sensitive to the Chinese economy underperformed. The technology, mining, travel, industrial and automobile sectors thus gave up more than 5% in August in Europe. However, the Chinese authorities reacted strongly at the end of the month with the introduction of credit support measures, and everything now points to a continuation of the rebound in global economic momentum initiated in September 2022. Should this be the case, the equity asset class could continue to benefit from reasonable valuations (12-month P/E of 13.0x in Europe and 15.0x in the US for the S&P 500 Equal Weight). Especially as inflation continues to fall, pointing to an accommodative reversal by central banks as early as the 1st half of 2024.

 

The market decline in August was ultimately significant enough to erase all of July’s gains. Bond yields remained stable in Europe, and the disappointing news on the Chinese economy cast a chill over cyclical stocks as a whole, particularly certain growth technology and industrial stocks that are well represented in the Digital Fund portfolios. Energy has been the only real winner on the markets, supported by oil prices. The more defensive health and real estate sectors are standing out relative to the market. Thus, after three consecutive months of relative outperformance and, despite favourable publications over the summer, the more defensive context of August and lower market volumes left the Digital Stars funds slightly behind their indices over the month. Digital Stars Europe Acc posted a monthly performance of -3.0% compared with -2.4% for the MSCI Europe NR. Digital Stars Continental Europe Acc ended August at -2.9% compared with -2.4% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc, with a more defensive profile, posted a monthly performance of -1.9% compared with -3.1% for the MSCI EMU NR.

 

The rebalancings carried out in August were diversified, selecting stocks in the industrial (construction, electrical equipment), utility, banking or food sectors. Among the exits were IT and healthcare stocks. We continue to observe a comeback of British stocks. The overweight of banking stocks in Digital Stars Europe is stable at 6.1%. Digital Stars Europe is also overweight financials, industrials and technology. The fund is underweight healthcare and consumer staples. The UK is now the fund’s top weight at 18.4%, ahead of Italy at 16.2% (still the largest overweight) and Germany at 12.6%.

 

Digital Stars Europe Smaller Companies Acc ended down -3.9% in August, vs. -2.9% for the MSCI Europe Small Cap NR. Positive publications boosted the retail sector in the fund, but this did not offset the decline in growth stocks, particularly in the IT sector. The monthly portfolio reviews focused on strengthening food and material sectors. Sales were mainly in IT, as well as in industry and finance. The portfolio is still mainly overweight in consumer discretionary, as well as in food, and significantly underweight in real estate. The United Kingdom is reinforced furthermore and weighs now 24.9% (but remains the most largely underweight country), ahead of Italy at 12.9%. Greece is still the most overweight country at 8.9%.

 

Digital Stars US Equities Acc USD was down -1.7% in August, in line with the MSCI USA NR and outperforming the MSCI USA Small Cap NR at -4.1%. Good contributions from the consumer staples sector and the energy sector, offset the weaker return of our positions in financials and consumer discretionary. The latest monthly portfolio review saw the addition of stocks from the consumer discretionary and media sectors. Sales were mainly in industry and real estate. Of note are significant offsetting purchases and sales in IT and healthcare. The portfolio remains overweight in industry and consumer discretionary. Media is still the biggest underweight, before pharma.

Read the associated document

Chahine Capital

Investment Monthly Report
July 2023

3 August 2023

Equity markets continued to rise in July (MSCI Europe NR +2%; MSCI USA NR +3.4%). A combination of several favourable factors justified the impressive equity rally initiated in September 2022. Economic momentum continued to pick up, as was reflected in significant upward revisions of economic growth forecasts; inflation and inflation expectations have fallen significantly, pointing to the potential for an accommodating monetary stance from central banks in the near future; corporate earnings are reassuring, highlighting attractive valuations for many segments of the stock market; and the level of equity investment by large institutional investors remains low, fuelling buying flows.

The US economy remains robust, with GDP growth revised upwards in July, removing the short-term risk of recession. As a result, cyclical sectors, well represented in the portfolio, outperformed. Banks, energy and basic materials were the month’s winners. Technology lagged, as did the luxury goods sector, impacted by disappointing results from LVMH and Richemont. In this bullish environment, Digital Stars funds are positive and in line with their indices. Performance was influenced by the announcement of half-yearly results, which were generally good. By the end of July, 52% of Digital Stars Europe stocks had published, and 70% of these companies had seen their 2023 earnings estimates revised upwards. These earnings announcements will continue over the next few weeks, which should keep investors focused on company fundamentals, and could once again be favourable to our strategy. Digital Stars Europe Acc posted a monthly performance of +2% compared with +2% for the MSCI Europe NR. Digital Stars Continental Europe Acc ended July at +2% compared with +1.9% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc, with a more defensive profile, posted a monthly performance of +1.9% compared with +0.9% for the MSCI EMU NR.

The rebalancing carried out in July was diversified, selecting stocks in the industrial, automotive, IT and healthcare sectors, as well as a few financials. Among the exits were basic materials stocks (mainly steel) and luxury goods. We continue to observe a comeback of British stocks. The overweight of banking stocks in Digital Stars Europe is stable at 6.1%. Digital Stars Europe is overweight financials, technology and industrials. The fund is underweight healthcare, food and utilities. Italy remains the fund’s top weight and largest overweight, at 16.4%. The UK moves into second place at 15.7%, ahead of Germany (12.7%).

Digital Stars Europe Smaller Companies Acc ended up +2.1% in July, vs. +3.4% for the MSCI Europe Small Cap NR. Greek stocks continued to perform well. But our semiconductor stocks and consumer discretionary stocks penalised the fund in relative terms. The monthly portfolio reviews focused on strengthening industry and IT sectors, as well as utilities. Sales were mainly in materials (chemicals and glass containers), as well as in finance, energy and consumer discretionary. The portfolio is still mainly overweight in consumer discretionary, and significantly underweight in real estate and materials. The United Kingdom is reinforced furthermore and weighs now 22.0% (but remains the most largely underweight country), ahead of Italy at 13.3%. Greece is still the most overweight country at 8.8%.

Digital Stars US Equities Acc USD was up +2.7% in July, vs. +3.4% for the MSCI USA NR and +5.2% for the MSCI USA Small Cap NR. The good publications of certain stocks were not enough to offset the less well-received publications in the industry. The fund’s under-exposure in the media also contributed negatively. The latest monthly portfolio review saw the addition of stocks from the finance, consumer discretionary and healthcare sectors. Sales were mainly in media, industry and technology. The portfolio remains overweight in industry, as well as in consumer discretionary. Media is now back to being the biggest underweight, before pharma.

Read the associated document

Chahine Capital

Investment Monthly Report
June 2023

10 July 2023

The global economy is surprisingly resilient, and this is reflected in the powerful appreciation of equity indices in June (MSCI Europe NR +2.4%, MSCI USA NR +6.6%). Whereas at the start of the year, the consensus of economists was predicting global GDP growth of +2.0% in 2023, the forecast is now +2.6%. This has led central banks to resume the restrictive rhetoric they abandoned at the time of the banking setbacks. They judge that the battle against inflation has not yet been won, despite the significant fall in inflation in recent months. Against this backdrop, the « Value » style logically stood out in June. Pro-cyclical in relative terms, it is benefiting from the rise in rates across all maturities on the yield curve to resume a trend that began in November 2020, when vaccines were discovered.

The markets therefore ended June on a high note. They seem to have finally assimilated the good corporate results and have resisted the central banks’ less accommodating stance. Fears of a pronounced economic slowdown have eased, favouring cyclical sectors, which are well represented in our portfolios. Banks, specialty retailing and tourism were the winners of the month, while technology took a breather after the rally at the end of May. In this favourable environment, the Digital Stars funds are positive and outperforming their indices. They are benefiting from an overweight in the financial sector and, more generally, from a positioning suited to rising interest rates, being underweight in the proxy bond sectors (healthcare, commodities, telecoms, property). Digital Stars Europe Acc posted a monthly performance of +3.2% compared with +2.4% for the MSCI Europe NR. Digital Stars Continental Europe Acc ended June at +3.8% compared with +2.7% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc, with a more defensive profile, posted a monthly performance of +2.3% compared with +3.8% for the MSCI EMU NR.

The rebalancing carried out in June was diversified, selecting stocks in the distribution, tourism, steel and banking sectors. Exits included energy, mining and healthcare stocks. British stocks are also making a comeback. The overweight in banking stocks has been increased to 6.7% in Digital Stars Europe. The weighting of the energy sector has returned to the level of its index. Digital Stars Europe is overweight financials, technology and industrials. The fund is underweight healthcare, consumer staples and utilities. Italy remains the fund’s largest holding and its largest overweight, at 15%, ahead of Germany (13.5%) and the United Kingdom (12.9%).

Digital Stars Europe Smaller Companies Acc ended up +3.4% in June, beating the MSCI Europe Small Cap NR at +0.8%. Semiconductors performed very well, as did Greek stocks. Lookers share jumped +34% on the announcement of Alpha Auto Group’s takeover bid. The monthly portfolio reviews focused on strengthening healthcare equipment, IT sectors, consumer discretionary and consumer staples. Sales were mainly in energy, materials (steel and glass) and media. The portfolio is still mainly overweight in consumer discretionary, and significantly underweight in real estate and media. The weight of energy is now in line with the market. The United Kingdom is reinforced and weighs now 18.7% (but remains the most largely underweight country), ahead of Italy which is decreased to 14.5%. Greece is the most overweight country at 8.8%.

Digital Stars US Equities Acc USD was up +8.3% in June, vs. +6.6% for the MSCI USA NR and +8.6% for the MSCI USA Small Cap NR. The month’s outperformance came mainly from industrials, which are well exposed in the fund, and technology. The latest monthly portfolio review saw the addition of stocks from the consumer discretionary, IT, real estate, as well as industry sectors. Sales were mainly in finance.
The portfolio remains overweight in industry. Finance is now the biggest underweight, before media and pharma.

Read the associated document

Chahine Capital

Investment Monthly Report
May 2023

6 June 2023

May was a month of contrasts for equity indices. They rose in the United States (S&P 500 NR +0.6%) and fell in Europe (MSCI Europe NR -2.5%).  Since the end of January, the trend has clearly been that of horizontal consolidation with relatively minor amplitude. Macro conditions weighed at the start of the month, with disappointing inflation figures and below-expectation economic surveys. Conversely, microeconomic fundamentals continue to deliver upside surprises as the quarterly publication period draws to a close. In this context, the earnings momentum is resuming an upward trend that had been temporarily overshadowed by the banking debacles of March and April.

Fears of a sharp economic slowdown, persistent inflation in the United States and the difficult negotiations over raising the US debt ceiling therefore weighed on the European markets, which ended May in negative territory. Only the technology sector turned in a positive performance, led by semiconductors, which are well represented in our portfolios, and which surged on the back of Nvidia’s results and the prospects for the rise of artificial intelligence. Conversely, the energy sector corrected sharply, with the price of Brent crude reaching its lowest level since December 2021.  Performances were also influenced by quarterly earnings announcements, which were good, but still with a notable asymmetry between the violence of the corrections caused by disappointments and the timid rises on stocks that published above expectations. 77% of the Digital Stars Europe companies that published their quarterly results saw their 2023 earnings estimates revised upwards, compared with 64% for the MSCI Europe, demonstrating the ability of our strategy to select stocks that surprise positively. In this bearish environment, the Digital Stars funds held up well, finishing close to their indices. Digital Stars Europe Acc posted a monthly performance of -2.2% compared with -2.5% for the MSCI Europe NR. Digital Stars Continental Europe Acc ended May at -2.4% compared with -2.3% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc posted a monthly performance of -3.9% compared with -2.5% for the MSCI EMU NR.

The rebalancing carried out in May was diversified, selecting stocks in the technology, consumer discretionary and air transport sectors, but also in non-cyclical sectors (healthcare and food). The outgoing stocks are mainly cyclical: energy, industrials and some banks. The fund’s profile is thus becoming slightly more defensive, and is adjusting to the economic slowdown. The overweight in banking stocks has been lowered to 5.9% in Digital Stars Europe, and the overweight in energy to 1.4%. Digital Stars Europe is also overweight financials, technology and industrials. The fund is underweight healthcare, consumer staples and utilities. Italy remains the fund’s largest holding and its largest overweight, at 15.1%, ahead of Germany (14.9%) and the United Kingdom (13.8%).

Digital Stars Europe Smaller Companies Acc ended down -2.3% in May, just ahead of the MSCI Europe Small Cap NR at -2.6%. The strong performances of some industrial stocks (Implenia, Munters group, NTG Nordic Transport Group) and Greek stocks (Piraeus Financial Holdings, Mytilineos) enabled the fund to offset the poor performance of energy transportation (d’Amico, D/S Norden, TORM, Stolt-Nielsen).
The monthly portfolio reviews focused on strengthening consumer discretionary, consumer staples, healthcare and IT sectors. Sales were mainly in banks, materials (copper), as well as media and energy.
The portfolio is still mainly overweight in consumer discretionary and energy, and significantly underweight in real estate and pharmaceuticals.
The United Kingdom (the most largely underweight country) weighs 17.4%, ahead of Italy (the most overweight country) at 16.0%, and Germany at 12.9%.

Digital Stars US Equities Acc USD was down -0.6% in May, vs. +0.6% for the MSCI USA NR and -1.8% for the MSCI USA Small Cap NR. This month’s underperformance came from the retail sector, whose good performance in the index is merely a mirage because Amazon is almost the only positive stock, but its weight is overshadowing the others.
The latest monthly portfolio review saw the addition of stocks across various sectors, with a particular focus on materials. Sales were mainly in financials and healthcare, as well as energy and real estate.
The portfolio remains overweight in industry. The underweight in media remains the most significant, followed by pharma.

Read the associated document

Chahine Capital

Investment Monthly Report
April 2023

5 May 2023

Equity indices performed well in April (MSCI Europe NR +2.5%, MSCI USA NR +1.2%). Corporate quarterly earnings have been very supportive. However, after a significant improvement since September 2022, recent macro releases have been rather weak in the developed countries, reinforcing the likelihood of a recessionary scenario in the months to come. The banking troubles have also rekindled systemic fears and led investors to focus on defensive stocks with strong balance sheets, while at the same time lowering their expectations of rate hikes by central banks. Long-term rates have thus fallen by nearly 50 basis points on both sides of the Atlantic since the beginning of March, which also provides relative support for Visibility/Quality securities, often qualified as « proxy bonds ».

These fears of a sharp economic slowdown led to a clear outperformance of defensive sectors and an underperformance of cyclical stocks in April. The cyclical bias of the Digital Stars funds and their underweight in defensive mega-caps had a negative impact on performances. However, banking stocks rebounded from their March falls. Performance was also influenced at the end of the month by quarterly earnings announcements, but with a notable asymmetry between the violence of the corrections caused by disappointments (particularly in semiconductors) and the timid increases in stocks that surprised positively. At the end of April, 26% of Digital Stars Europe stocks had reported, and 72% of these companies had seen their estimated profits for 2023 revised upwards. The pace of earnings announcements will intensify over the coming weeks, which should refocus investors’ attention on company fundamentals and could be more supportive of our strategy. In this difficult environment, Digital Stars Europe Acc posted a monthly performance of -0.6% compared to 2.5% for the MSCI Europe NR. Digital Stars Continental Europe Acc ended April at -0.4% against 2.2% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc achieved 0.5% against 1.5% for the MSCI EMU NR.

The rebalancing carried out in April was diversified, selecting stocks in the industrial, consumer discretionary and technology sectors, but also in non-cyclical sectors (healthcare, telecoms, and utilities). The outgoing stocks are mainly cyclical: Energy, Basic Materials and Banks. The fund’s profile is thus becoming slightly more defensive, adjusting to the economic slowdown. The overweight in banking stocks is lowered to 6.2% in Digital Stars Europe, while the overweight in energy is reduced to 2.9%. Digital Stars Europe is overweight financials, industrials, technology and energy. The fund is underweight in healthcare, food and utilities. Italy remains the fund’s largest weight and the largest overweight, at 16.4%, ahead of Germany (15.1%) and the UK (12.5%).

Digital Stars Europe Smaller Companies Acc ended down -1.0% in April, vs. +1.6% for the MSCI Europe Small Cap NR. The rebound of financials and the good publications of some stocks were not able to counteract the disappointing performance of our technology stocks.
The monthly portfolio reviews focused on strengthening specialty retail, IT, as well as energy and materials. Sales were mainly in industry and finance, as well as in healthcare and consumer staples.
The portfolio is still mainly overweight in consumer discretionary and energy, and significantly underweight in real estate and pharmaceuticals.
Italy (the most overweight country) weighs 17.9%, ahead of the United Kingdom (the most largely underweight country) at 16.2%, and Germany at 12.5%.

Digital Stars US Equities Acc USD was down -2.8% in April, vs. +1.2% for the MSCI USA NR and -1.4% for the MSCI USA Small Cap NR. The fund was affected by its IT holdings and its exposure to regional banks. Inter Parfums and e.l.f. Beauty continued their remarkable bullish run in April.
The latest monthly portfolio review saw stocks in the technology, healthcare equipment and real estate sectors enter the portfolio. Sales were mainly in banks, as well as in energy.
The portfolio remains overweight in industry, and has strongly reduced its over-exposure to (regional) banks. Media is still the most underweight sector.

Read the associated document

Chahine Capital

Macro update – April 2023

14 April 2023

Chahine Capital

Investment Monthly Report
March 2023

11 April 2023

The banking sector’s woes reignited systemic fears in March. Volatility has made a comeback and is emerging from a long period of lethargy. At the same time, a powerful rotation within the stylistic and sectoral segments of the market occurred. The sharp drop in long-term yields, due to the increased risks of recession, also echoes a probable change in the pace of rate hikes by central banks. They now know the red line that must not be crossed in their monetary tightening. In this context, the Value segment, the big winner of the last 30 months, clearly underperformed in March due to its high exposure to Financials. Conversely, the “Visibility” style, which includes defensive, low-debt stocks with steady cash-flows, sometimes called « proxy-bonds », performed very well, both in absolute and relative terms.

After two months of gains for our funds, which benefited from positive surprises on stocks announcing their results, the situation was more complicated in March.  The collapse of Silicon Valley Bank, followed by Credit Suisse, reshuffled the deck, with a crash in banking and energy stocks. Our exposure to banks, our cyclical bias and our underweight in defensive mega-caps weighed. The sector rotation was so violent that, unsurprisingly, the funds underperformed and gave back performance. With the actions of the Federal Reserve and the Treasury Department, and the takeover of Credit Suisse by UBS organised by the Swiss authorities, the market stabilised, as did the relative performance of the funds. It should be noted that no discretionary decisions were taken during this period. Our solid experience in managing Digital Stars funds has taught us that discretionary decisions, which do not follow the model, are not profitable. There is no reason to believe that this time would be any different. So we continued to apply our models strictly, as we have always done in previous crises. As risk aversion diminishes, investors should once again focus on company fundamentals and news flow, especially as we approach the first quarter earnings announcement period, which is usually a good time for our strategy.

In this difficult environment, Digital Stars Europe Acc posted a monthly performance of -4.5% against -0.1% for the MSCI Europe NR and -4.1% for the MSCI Europe Small Cap NR. Digital Stars Continental Europe Acc ended March at -3.6% against 0.8% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc achieved -2.4% against 0.7% for the MSCI EMU NR.
Rebalancing in March was diversified, selecting stocks in the technology, consumer discretionary, healthcare and industrial sectors. Growth stocks are well represented in this selection. We stop to integrate financials as trends have been affected by the banking turmoil and some have been sold. The overweight in banking stocks has been reduced from 8.9% at the end of February to 6.9% in Digital Stars Europe. We are also selling energy and basic materials stocks. Digital Stars Europe is overweight financials, energy, industrials and technology. The fund is underweight healthcare, food and utilities. Italy remains the fund’s largest weight and the largest overweight, at 16.3%, ahead of Germany (15.5%) and the UK (13.3%).

Digital Stars Europe Smaller Companies Acc ended down -4.2% in March, in line with the MSCI Europe Small Cap NR at -4.1%. Positions in oil shipping and an underweight in real estate helped the fund overcome the impact of the banks.
The monthly portfolio reviews focused on strengthening IT and consumer discretionary. Sales were mainly in finance, as well as in energy and more defensive sectors like utilities or healthcare.
The portfolio is now mainly overweight in consumer discretionary and energy, as well as in banks, and significantly underweight in real estate and pharmaceuticals.
Italy (the most overweight country) weighs now 17.8%, ahead of the United Kingdom (the most largely underweight country) at 14.9%, and Denmark at 12.4%.

In a very divergent US market where the MSCI USA NR ended up +3.5% and the MSCI USA Small Cap NR -4.3%, Digital Stars US Equities Acc USD was down -3.7% in March. Significant exposure to regional banks had a strong impact on the fund, as did the under-exposure to technology mega-caps and the underperformance of our retail and oil companies. The good performance of Inter Parfums, e.l.f. Beauty and our healthcare stocks were not sufficient to compensate for this adverse effect.
The latest monthly portfolio review was diversified on the new entrant side. Sales were mainly in energy and consumer staples, as well as consumer discretionary.
The portfolio remains overweight in finance and industry, and underweight in media and pharmaceuticals.

Read the associated document

Chahine Capital

Steel pipe supplier to oil giants gears up for the energy transition – Citywire

30 March 2023

Tenaris is a leading supplier of steel pipes to the oil and gas sector that is diversifying its customer base in response to the energy transition.

Chahine Capital was asked about the Tenaris investment case, written by Miles Costello for Citywire to provide quantitative insights.

Read the associated document

This is not an investment recommendation. 

Chahine Capital

Investment Monthly Report
February 2023

7 March 2023

European equity indices stood out again in February (MSCI Europe NR +1.8%), unlike the US indices (MSCI USA NR -2.4%). The spectacular upturn of China after the sudden withdrawal of the zero covid policy is having a positive impact on many European heavyweights. Moreover, the rise in interest rates tends to favour the most « value » geographical area, i.e. Europe. The improvement in economic momentum, linked to the reopening of the Chinese economy, is reflected in the economists’ consensus, which has recovered strongly. Eurozone GDP growth in 2023 is now forecast at +0.4% compared to -0.1% only 2 months ago. The same is true for the US, where GDP growth in 2023 is now forecast at +0.7% compared to +0.3% at the end of December.

Digital funds continued to rise in February, outperforming their benchmarks. Sector bets contributed positively, with overweight positions in energy and banks benefiting from higher interest rates. The portfolios also benefited from positive surprises on stocks announcing their results. Thus 73% of Digital Stars Europe stocks that reported earnings had their 2023 earnings estimates revised upwards, compared with only 46% of MSCI Europe stocks. The decrease in risk aversion has allowed a re-correlation between company news and performance, which is very favourable to our strategies. The stocks in the fund, that saw their 2023 outlook improve as a result of their announcements, achieved an average YTD return of +15.7%, compared to +2.2% only for those that were revised downwards. In this favourable environment, Digital Stars Europe Acc posted a monthly performance of +3.8% against +1.8% for the MSCI Europe NR, and a YTD performance of +9.2% against +8.7%. Digital Stars Continental Europe Acc ended February at +3.9% against +1.5% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc achieved +4.3% against +1.6% for the MSCI EMU NR.

February rebalancing reinforces the cyclical bias of the funds. Thus, we have integrated stocks in the financials, basic materials, industrials and consumer discretionary sectors. Exposure to Energy (especially alternative energies) is slightly lowered, as for paper products and fertilisers. We are also selling defensive stocks in the consumer staples and cosmetics sectors. Digital Stars Europe is overweight financials (11%), energy (4.6%), and industrials (3.4%). The fund is underweight in healthcare (11.8%), consumer staples (9.5%) and utilities (1.5%). Italy remains the fund’s largest weight and largest overweight, at 17.1%, ahead of the UK (the most underweight country) at 13.4% and Germany (12.9%).

Digital Stars Europe Smaller Companies Acc ended up +6.0% in February, strongly outperforming the MSCI Europe Small Cap NR at +2.8%. The fund mainly benefited from good publications on companies active in energy storage and transportation, and on banks. The monthly portfolio reviews focused on strengthening consumer discretionary, materials and banks. Sales were mainly in industry, as well as in more defensive sectors linked to renewable energy (utilities, energy) or health care. The portfolio remains overweight in energy, banks and consumer discretionary, and significantly underweight in real estate, as well as IT and pharmaceuticals. The United Kingdom (the most largely underweight country) is now tied with Italy (the most overweight country) as the largest country weight at 15.9%, ahead of Denmark at 12.2%.

Digital Stars US Equities Acc USD was up slightly by +0.7% in February, in a falling market where the MSCI USA NR ended at -2.4% and the MSCI USA Small Cap NR at -1.8%. Capital markets stocks, consumer staples and consumer discretionary contributed very positively to the fund’s outperformance. The energy sector (-7% return in the US market) contributed negatively, due to its overweight. The latest monthly portfolio review strengthened IT and healthcare, as well as finance. Sales were mainly in consumer discretionary, as well as communication services, energy and materials. The portfolio remains overweight in finance and industry, and underweight in media, as well as pharmaceuticals and IT.

Read the associated document

Chahine Capital

Capturing the stock “momentum” factor – Luxembourg Official

13 February 2023

“Chahine Capital’s algorithms revisit each month the investment case of more than 1,500 european stocks,” states Charles Lacroix, CEO of Chahine Capital. He tells us about the technology that supports the company activity.

Read the associated document

Chahine Capital

Investment Monthly Report
January 2023

7 February 2023

Equity indices rose strongly in January (MSCI Europe NR +6.8%, MSCI USA NR +6.5%), extending the powerful rebound that began at the end of September 2022. There are many reasons for this increase. Inflation is falling faster than expected, which argues for a forthcoming easing of monetary policy, and China has abandoned its « zero covid » policy, which suggests a recovery in the global economy. It is therefore logical for equity indices to recover, especially as valuation was at a deep discount and investors were underinvested, according to sentiment indicators.

This prospect of « disinflation » led to a bullish rally in the first few days of January, concentrated on stocks which were negatively-sensitive to inflation and had been oversold in 2022. This rebound, fuelled by low momentum stocks, was only partially followed by Digital Funds despite a good sector allocation (overweight banks, industrials and technology). The second half of the month was more favourable to our strategy, which benefited from positive surprises on stocks announcing their results (Banco de Sabadell, Unicredit, SSAB, TGS, PGS, ASMI, etc.) and from exposure to banks. The improved visibility of central bank action, the decline in the level of macroeconomic uncertainty, and the upcoming intensification of corporate earnings announcements should allow a return to fundamentals in the markets. Along with a re-correlation of corporate earnings and future prospects with their stock market performance, these factors could lead to a favourable environment for stock picking by Digital funds.

Digital Stars Europe Acc posted a monthly performance of +5.3% against +6.8% for the MSCI Europe NR. Digital Stars Continental Europe Acc ended January at +5.6% versus +7.5% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc achieved +6.4% versus +9.6% for the MSCI EMU NR.

Rebalancing in January continued to strengthen banking stocks. Financials have thus seen their weighting increased by 4.5% in one month and become the most overweight sector in Digital Stars Europe (26.5% against 17.4% in the MSCI Europe). We have also added some industrial, technology and commodity stocks. Exposure to Energy has decreased slightly. We are also selling defensive stocks in the food and healthcare sectors. The cyclical bias is reinforced. Digital Stars Europe is overweight financials (9.1%), energy (5.6%), and industrials (3.5%). The fund is underweight healthcare (11.2%), consumer staples (8%) and consumer discretionary (2.4%). Italy remains the fund’s largest weight and largest overweight at 16.6%, ahead of Germany (13%) and the UK (the most underweight country) at 12.5%.

Digital Stars Europe Smaller Companies Acc finished up at +1.2% in January, underperforming the MSCI Europe Small Cap NR at +7.4%. Stocks linked to energy transportation, the champions of the end of 2022, turned sharply downwards, preventing the fund from taking full advantage of the rebound in small caps. The share price of PNE lost 22% in just two days, following the decision of its main shareholder to finally abandon the sale of its stake.
The monthly portfolio reviews focused on strengthening financials, especially banks. Sales were mainly in IT and utility sectors, as well as in energy and healthcare.
The portfolio is significantly overweight in energy and industry, as well as in banks, and underweight in real estate, IT and pharmaceuticals.
The United Kingdom (the most largely underweight country) is still the largest country weight with 16.2%, ahead of Italy (the most largely overweight country) at 15.0%, and Denmark at 10.9%.

Digital Stars US Equities Acc USD rose by +6.3% in January, vs. +6.5% for the MSCI USA NR and +10.4% for the MSCI USA Small Cap NR. The underweight in healthcare, as well as the remarkable performance of some consumer staples (Inter Parfums) and industrial (CECO Environmental, MRC Global) stocks, helped to offset the underperformance of the regional banks held in the portfolio.
The latest monthly portfolio review strengthened once more the consumer discretionary sector (retailing), as well as steel, food and energy (equipment). Sales were mainly in industrials and finance, as well as communication services.
The portfolio remains overweight in finance and industry, and underweight in pharmaceuticals, as well as media and IT.

Read the associated document

Chahine Capital

Macro update – January 2023

9 January 2023

Chahine Capital

Investment Monthly Report
December 2022

31 December 2022

Equity indices fell in December and ended the powerful rally seen since the end of September. As we approach 2023, equity markets, which are 12 months ahead of the real economy, now have their eyes on 2024. 2023 will undoubtedly be a difficult year on the economic front with an expected recession. However, with an almost 5% increase in earnings in 2022 coupled with a c. 20% decline in US indices, it seems to us that a tough scenario was already anticipated by the markets last year, and that the weaker improvement in visibility, could continue to support a US equity market whose valuation is close to the historical average, as we have seen since end September.

In this bearish environment, financial stocks held up particularly well, benefiting from rising interest rates and earnings estimates that were again revised upwards. Conversely, cyclical sectors (energy, basic materials, consumer discretionary) suffered amid fears of a coming recession. Technology, which had rebounded in November, was the worst performer with a decline of 8.8% in December, ending a year of devaluation at -28.7%. The Digital funds’ exposure to banking stocks compensates its cyclical and technology bets and explains a monthly performance close to their benchmarks. Digital Stars Europe Acc posted a monthly performance of -3.8% against -3.5% for the MSCI Europe NR. Digital Stars Continental Europe Acc (formerly Digital Stars Europe Ex-UK Acc) ended December at -2.8% versus -3.4% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc achieved -1.7% versus -3.6% for the MSCI EMU NR.

Rebalancing in December continued to strengthen banking stocks, which represent almost half of the stocks introduced. Financials have seen their weighting increased by 4.5% in one month and become the second overweight in Digital Stars Europe.  We have also integrated some industrial stocks. The exposure to basic materials is lowered again. We are also selling defensive stocks in food (production or distribution), cosmetics and healthcare. Digital Stars Europe is overweight energy (5.8%), financials (5.2%) and technology (3.5%). The fund is underweight in healthcare (10.3%), consumer staples (7.1%) and consumer discretionary (2.4%). Italy becomes the fund’s top weight at 12.4%, ahead of the United Kingdom (the most underweight country) at 12.3% and Germany (11.2%).

Digital Stars Europe Smaller Companies Acc finished down at -1.8% in December, outperforming the MSCI Europe Small Cap NR at -2.5%. The year 2022 ended with an excess return of +2.6% for the fund (-19.9% vs. -22.5% for the index). In December, the good performance of the fund in relative terms comes mainly from marine transportation and other industrials. They offset the underperformance of energy.
The monthly portfolio reviews focused on strengthening industrials and financials. Sales were mainly in energy, utilities and healthcare.
The portfolio is significantly overweight in energy and industry, as well as in utilities, and underweight in real estate. The weight of finance is now aligned to the index.
The United Kingdom (the most largely underweight country) is still the largest country weight with 16.2%, ahead of Italy (the most largely overweight country) at 12.2%. Norway weighs 10.2%, and is the 2nd most overweight country, behind Italy.

Digital Stars US Equities Acc USD fell by -7.5% in December, behind the MSCI USA NR at -5.9% and the MSCI USA Small Cap NR at -6.0%. The fund’s good positioning (underweight) in technology and media was not enough to offset the main sources of underperformance: healthcare, as well as industrials and banks.
The latest monthly portfolio review strengthened consumer discretionary, as well as technology, telecoms and healthcare. Sales were mainly in industrials and energy, as well as food.
The portfolio remains significantly overweight in finance and industry, and underweight in pharmaceuticals, as well as technology and media.

Read the associated document

Chahine Capital

Investment Monthly Report
November 2022

8 December 2022

In November equity indices continued their strong rebound, first initiated in October. The MSCI Europe NR index and the S&P 500 NR rose by +6.9% and +5.5% respectively. Since the 2022 market lows seen in mid-October, the rise in the US and Europe has been substantial (circa +15%). A combination of positive factors is behind this spectacular rise. Economic momentum is rebounding, due in particular to confidence indicators that are recovering from historic lows in some cases. Inflation is falling faster than expected in the US, and this reinforces the likelihood of a scenario where central banks cut rates as early as 2023. China could relax its « zero covid » policy, which is hampering global exchanges. Finally, Q3 earnings publications have been solid and highlight the « cheap » valuation of equities.

This monthly rise was driven by growth stocks (technology, consumer discretionary), which benefited from the decline in long-term rates. Conversely, defensive sectors with lower beta (food, telecom and healthcare), as well as the energy sector, posted the weakest performances. The U.S. inflation figures published on November 10, showing a slowdown and thus lowering expectations of rate hikes, triggered two days of violent rebounds in low momentum stocks. The European technology sector, which was down 28% since the beginning of the year on November 9, jumped 9% in two days. The markets then normalized, partially correcting the excesses of these two days. Digital Stars Europe Acc posted a monthly performance of +5.6% against +6.9% for the MSCI Europe NR, the underperformance being attributable to the phenomenon of reversion to the mean observed in the middle of the month. Digital Stars Continental Europe Acc (formerly Digital Stars Europe Ex-UK Acc) ended November at +5.3% versus +7.1% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc achieved +4.7% versus +8.4% for the MSCI EMU NR.

The rebalancing carried out in November was diversified. Financial stocks (banks and reinsurers) were reinforced. We also integrated some industrial, technology and healthcare stocks. Exposure to basic materials was lowered slightly. The price momentum has also taken out some underperforming energy stocks this month. Digital Stars Europe is overweight energy (6%), technology (3.5%) and basic materials (2.5%). The fund is underweight in healthcare (10.5%), consumer staples (4.6%) and consumer discretionary (2.8%). The United Kingdom is the largest weighting at 13.9%, ahead of Germany at 10.8% and the Netherlands at 10.8%.

The upward trend has also benefited small and medium-sized stocks: Digital Stars Europe Smaller Companies Acc finished up at +4.6% in November, compared to +6.3% for the MSCI Europe Small Cap NR. The underperformance stems from the violent upturn on 10-11 November, which mainly favoured technology stocks. Some stocks in the industrial, energy, and materials sectors also weighed negatively on the fund’s appreciation.
The monthly portfolio reviews focused on strengthening healthcare, as well as industry, finance and consumer staples. Sales were mainly in materials and utilities.
The portfolio is still significantly overweight in energy, as well as in utilities and industry, and underweight in real estate and finance.
The United Kingdom (the most largely underweight country) is still the largest country weight with 16.5%, ahead of Germany (12.6%). Norway now weighs only 8.3%, and is only the 3rd most overweight country, behind Italy and Denmark. 

Digital Stars US Equities Acc USD returned +2.1% in November, behind the MSCI USA NR at +5.4% and the MSCI USA Small Cap NR at +4.1%. Strong performances from technology and consumer cyclicals were not enough to offset the strong underperformance of banks.
The latest monthly portfolio review strengthened technology and consumer staples, and reduced consumer discretionary and real estate.
The portfolio remains significantly overweight in banks, industrials and energy, and underweight in pharmaceuticals, technology and media.

Read the associated document

Chahine Capital

Elite stock: Top investors bank on a cashflow king – Citywire

22 November 2022

Chahine Capital was asked about the Ipsos investment case, written by Miles Costello for Citywire Wealth Manager, to provide quantitative insights.

To read the full press article click here

Chahine Capital

Investment Monthly Report
October 2022

7 November 2022

Equity indices rebounded strongly in October, returning to their early September levels. For the fifth month in a row, we can observe a variation in absolute terms of more than 5% in the European indices. This has not been observed since October 1997. The same kind of phenomenon can be spotted on the other side of the Atlantic.
While the macro-economic context remains gloomy and dominated by inflation, which is still rising in Europe to double digits and which is falling only very modestly in the United States, investors have preferred to focus on attractive fundamentals during this quarterly publication period. Furthermore, the expectation of an accommodative Fed pivot as early as Q2 2023 is growing and is fuelling the idea that the recession will be short-lived and that the peak of inflation in the US is now behind us.

This monthly rise was driven by cyclical sectors, led by the energy sector, which has been the only positive sector since the beginning of the year. Defensive stocks rose to a lesser extent. The difficulties of the semiconductor sector, impacted by the disappointing results of TSMC and the export control measures imposed by the United States on China, should be noted. Digital Stars Europe Acc joined this market rebound and posted a monthly performance of +5.7% compared to +6.2% for the MSCI Europe NR. Digital Stars Continental Europe Acc (formerly Digital Stars Europe Ex-UK) ended October at +6% compared to +6.6% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc achieved +6.4% against +7.9% for the MSCI EMU NR.

The rebalancing carried out in October was diversified, favouring large caps. Banks were reinforced. We also integrated some defensive stocks and luxury goods. Exposure to commodities was slightly lowered. The price momentum has moved out of telecom stocks, as the fund continues to adapt to a higher interest rate environment. Digital Stars Europe is overweight energy (7%), technology (3.3%) and basic materials (3%). The fund is underweight in healthcare (10.8%), consumer discretionary (3.5%) and consumer staples (3.3%). UK is the largest weighting at 14.9%, ahead of Germany at 11.7% and the Netherlands at 11%.

The rebound particularly benefited small and mid caps, allowing Digital Stars Europe Smaller Companies Acc to finish up at +8.6% in October, compared to +7.0% for the MSCI Europe Small Cap NR. The fund’s good performance continues to be led by the energy sector. Some marine transportation stocks are performing remarkably well, as well as others driven by their good news flow.
The monthly portfolio reviews focused on strengthening industrials, as well as media and materials. Sales were mainly in consumer cyclicals (textile and apparel).
The portfolio is still significantly overweight in energy, as well as in utilities, and underweight in real estate, finance and pharmaceuticals.
The United Kingdom (the most largely underweight country) is still the largest country weight with 16.6%, ahead of Germany (12.0%). Norway’s weight sits at 9.9%, and the country remains the most largely overweight. 

Digital Stars US Equities Acc USD returned +11.6% in October, outperforming the MSCI USA NR at +7.9% and the MSCI USA Small Cap NR at +10.3%. Energy was the best performing sector in the fund over the month. Good news flows benefited some of the fund’s stocks, notably in industry and finance.
The latest monthly portfolio review, which was fairly diversified, strengthened financials, energy and materials, and reduced retail, industrials and technology.
The portfolio is significantly overweight in banking, industrials and energy, and underweight in technology, pharmaceuticals and media.

Read the associated document

Chahine Capital

« Digital Stars Europe Ex-UK » becomes « Digital Stars Continental Europe »

21 October 2022

Chahine Capital, a pioneer in quantitative Equity « Momentum » since 1998, has renamed its Digital Stars Europe Ex-UK fund to Digital Stars Continental Europe.

Launched in 2006, Digital Stars Continental Europe is an All Caps European equity fund, which aims at outperforming Europe ex-UK markets by identifying, through proprietary quantitative models, « star » companies, those with the ability to repeatedly surprise investors positively.

Read the associated document

Chahine Capital

Macro update – October 2022

10 October 2022

Chahine Capital

Investment Monthly Report
September 2022

7 October 2022

September was a challenging month for equity indices, which are now trading below their early March lows in Europe and below their June lows in the US. This decline has been global, and the various equity styles suffered uniformly, a sign that macroeconomic news has dominated investors’ minds and taken the lead over more fundamental and microeconomic considerations. Inflation releases have been disappointing and economic momentum continues to deteriorate, mainly due to sharp rises in key interest rates by central banks, in their efforts to tackle inflation. It is important in this depressed environment to remember that the best investment opportunities take root in times of crisis and there is no reason why the current period should be any different. There are many reasons for this. Sentiment indicators are down and some are at historic lows – a traditionally contrarian indicator, which suggests that a lot of bad news is already priced in. Central banks are expected to reverse their monetary policy towards a more accommodative stance as early as Q2 2023, according to the shape of the yield curves. Finally, valuations are at levels not seen for a long time. In the US, 12-month forward P/E is 15.3x compared with a historical average of 16.3x since 2000. In Europe, the discount is as high as 25% (current P/E of 10.5x vs. historical average of 14.0x).

These market falls have led investor expectations of a recession to have risen sharply. Cyclical stocks (Technology, Industrials – especially shipping) have suffered, while defensive stocks (Food, Health) held up well. Banks, benefiting from rising interest rates, also slightly outperformed the indices. In this risk-averse environment, small and mid-caps were particularly affected, with only the large defensive caps limiting their losses. As may appear logical; the absence of a stable trend and the weak influence of news flow and company fundamentals on stock performances, constitute an unfavourable environment for our momentum approach. October will be marked by the announcement of half year results, a period that is usually favourable to our strategy, especially as the stocks in the portfolio continue to see their estimated profits revised upwards.

The full month performance of Digital Stars Europe Acc is -9.5% compared to -6.3% for the MSCI Europe NR and -10.9% for the MSCI Europe Small Cap NR. The main explanation for the monthly underperformance comes from the fund’s underweight in mega-caps, and the necessary exposure to small and mid-caps to identify Stars.

Digital Stars Continental Europe Acc (formerly Digital Stars Europe Ex-UK) ended September at -9.2% compared to -6.2% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc achieved -8.9% against -6.3% for the MSCI EMU NR.

The September rebalancing has a non-cyclical bias. Food and health care stocks were included, while exposure to basic materials, shipping and semiconductors was reduced. A few banks were also included. Digital Stars Europe is overweight energy (7.8%), basic materials (3.8%), and technology (3.2%). The fund is underweight in healthcare (10.2%), food (4.6%) and consumer discretionary (3.7%). Germany is the largest weighting at 13.3%, ahead of the UK at 13.2% and Norway at 9.6%.

Digital Stars Europe Smaller Companies Acc finished down at -9.9% in September, resisting well the -10.9% drop of the MSCI Europe Small Cap NR. The fund’s relative resilience is mainly due to industrials (PNE, Implenia, BIC) and financials (Jyske Bank, Valiant Holding). Apart from a few standout stocks (TORM, Energean), energy and materials have penalised the fund.
The monthly portfolio reviews focused on strengthening insurance, industry and consumer discretionary. Sales have mainly occurred in food.
The portfolio is still significantly overweight in energy, as well as in utilities, and underweight in real estate, media and finance.
The United Kingdom (the most largely underweight country) is still the largest country weight with 19.3%, ahead of Germany (12.6%). Norway’s weight was reduced to 9.4%, but the country remains the most largely overweight. 

Digital Stars US Equities Acc USD finished -6.9% lower in September, ahead of the MSCI USA NR at -9.3% and of the MSCI USA Small Cap NR at -9.5%. The healthcare sector (pharma) held up best in the US equity market, but the portfolio was under-represented. It was mainly a few financial stocks that helped the fund hold up well in the general downturn.
The latest monthly portfolio review strengthened IT, as well as industry, real estate and healthcare. Consumer discretionary has been reduced further (especially retailing), as well as to a lesser extent materials, food and energy.
The portfolio is clearly overweight in industry and banks, and underweight in IT, pharmaceuticals and media.

Read the associated document

Chahine Capital

Notice to shareholders of the sub-fund Digital Funds Stars Europe Ex-UK

3 October 2022

Dear Shareholder,

Notice is hereby given to you, as shareholders of the Sub-Fund “Digital Funds Stars Europe ex-UK” of the Fund, that the Sub-Fund will be renamed to “Digital Funds Stars Continental Europe” as of 27
September 2022.

This name change will have no impact on the Sub-Fund’s investment policy or its investment process, which remain unchanged.

Furthermore, this name change will have no impact on the ISIN codes, Bloomberg tickers or any other characteristics of the Sub-Fund’s share classes.

Read the full document

Chahine Capital

Investment Monthly Report
August 2022

6 September 2022

After an encouraging rebound for markets in July, equities resumed their downward trend in August. The MSCI Europe NR and the MSCI USA NR gave up -4.9% and -4.0% respectively over the month. Since the beginning of the year, the decline has reached -11.8% in Europe and -17.4% in the US. The sharp drop in global economic momentum, a lack of geopolitical visibility and tightening of monetary policies in an inflationary context are all elements that have led investors to favour a cautious approach. What is likely to dictate the direction of the markets in the coming weeks is the evolution of inflation. In the spring, central bankers started a race against the clock to contain the contagion effects of inflation, which at this stage is still mainly caused by the rise in commodity and energy prices, a phenomenon that is exogenous in nature. If this race against time is won, we can expect central banks to adopt a more accommodating monetary policy again, perhaps as early as 2023, which would benefit equity markets that are highly undervalued compared to their historical standards, especially in Europe.

The financial markets continued to rebound in early August with little volatility. But the Fed’s determination to fight inflation at all costs led to a violent correction from mid-August onwards. Digital funds ended the month down but resisted well relative to their benchmarks. The overweight in the energy sector and the continuation of half-year corporate earnings announcements explain this slight outperformance. The portfolios benefited from numerous announcements that exceeded expectations (u-blox Holding, Glanbia Plc, TORM PLC, OCI NV, etc.).
The full month performance of Digital Stars Europe Acc is -4.5%, compared to -4.9% for the MSCI Europe NR. Digital Stars Europe Ex-UK Acc ended August at -4.3% compared to -5.1% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc achieved -5.9% against -5% for the MSCI EMU NR.

Rebalancing in August increased exposure to the energy sector but lowered exposure to basic materials. We are also integrating some more defensive stocks in food, telecoms and cosmetics. We are selling mostly cyclical stocks in the industrial and basic materials sectors.
Digital Stars Europe is overweight energy, basic materials and technology. The overweight in energy is 7.3%. The fund is underweight in healthcare and food. The UK remains the largest weighting at 15%, ahead of Germany at 12.1% and Norway at 10.3%.

Digital Stars Europe Smaller Companies Acc finished down at -4.6% in August, resisting well the -6.9% drop of the MSCI Europe Small Cap NR. The outperformance was due to the overweighting of the energy sector, the only positive sector in the month, and to the good results published by some companies. An underweight position in financials negatively impacted the fund.
The monthly portfolio reviews focused on strengthening pharma, consumer cyclicals and energy. Sales were mainly in technology and materials (mainly metals).
The portfolio is still significantly overweight in energy, as well as in utilities, and underweight in real estate, finance and industry.
The United Kingdom (the most largely underweight country) is the largest country weight with 20.8%, ahead of Norway with 13.9% (the most largely overweight country). 

Digital Stars US Equities Acc USD finished -2.7% lower in August, ahead of the MSCI USA NR at -4.0% and in line with the MSCI USA Small Cap NR at -2.6%. The underweight in technology benefited the fund in relative terms, as did the strong performance of consumer discretionary stocks, particularly in retail.
The latest monthly portfolio review strengthened energy and industry, as well as communication services. Consumer discretionary has been heavily reduced (especially retailing), as well as to a lesser extent chemicals and pharmaceuticals.
The portfolio is clearly overweight in banks and industry, and underweight in IT, pharmaceuticals and media.

 

Read the associated document

Chahine Capital

Investment Monthly Report
July 2022

4 August 2022

The second half of the year is kicking off with a bang for equity investors (Stoxx 600 NR +6.1%, S&P 500 NR +9.2%) and this contrasts with the trend observed during the first half of the year. The month of July thus marks a break for the financial markets. Equities are rising, interest rates are falling, as are commodity and energy prices. A shift can also be seen within the major stock styles. Growth, for example, has put an end to a long sequence of declining multiples, ranking first among the styles over the month thanks to the rebound of technology, luxury and retail stocks. Conversely, Value, after underperforming in June, underperformed again in July, hurt by the relatively poor performance of the financials, telecoms and mining sectors, but remains so far the best style since the beginning of the year.

The financial markets continued to fall at the beginning of July, with fears oscillating between recession and inflation. They then rebounded strongly from 5 July, buoyed by the stimulus measures in China, the fall in interest rates and, above all, the announcements of half-yearly company results. These announcements refocused investors’ attention on company news flow and fundamentals. The environment then became much more favourable for Digital Stars funds. After losing 3.3% over the first 5 days of July, Digital Stars Europe has rebounded by 13.4% since 5 July and ended the month 2.1% ahead of its benchmark. Portfolios benefited from numerous announcements that exceeded expectations (Hapag Lloyd, Truecaller, Hexatronic, Norske Skog, Elkem, Sartorius Stedim, etc.). Industrials (mainly shipping) and technology were our big winners of the month, while financials were negatively impacted by the announcement of a super-tax in Spain and political uncertainty in Italy. The full month performance of Digital Stars Europe Acc is +9.7%, compared to +7.6% for the MSCI Europe NR. Digital Stars Europe Ex-UK Acc ended July at +9.1% compared to +8% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc achieved +7.5% against +7.3% for the MSCI EMU NR.

Rebalances in July were diversified. They are more influenced by company news flow than by sector trends. They mainly included stocks in the renewable energy, healthcare, food, telecom and technology sectors. We are selling mostly cyclical stocks in the industrial, basic materials and financial sectors.

Digital Stars Europe is overweight basic materials, energy and technology. The overweight in basic materials is again lowered to 6.5%. The fund is underweight food and healthcare. The UK remains the largest country weight at 15.7%, ahead of Germany at 12% and Norway at 9.8%.

Digital Stars Europe Smaller Companies Acc ended up at +10.8% in July, ahead of the MSCI Europe Small Cap NR at +9.8%. The rebound initiated on July 5th has been driven by earnings announcements (Hexatronic, Norske Skog, Incap, Hanza). The fund was supported by the good performance of transportation and technology.
The monthly portfolio reviews focused on strengthening renewables (industrials and utilities), as well as healthcare and consumer discretionary. Sales were mainly in financials and materials (primarily metals), as well as technology.
The portfolio is still significantly overweight in energy, as well as in utilities, and underweight in real estate, industry and finance.
The United Kingdom (the most largely underweight country) is the largest country weight with 21.5%, ahead of Norway with 14.6% (the most largely overweight country).

Digital Stars US Equities Acc USD ended up +11.0% in July, ahead of the MSCI USA NR at +9.3% and the MSCI USA Small Cap NR at +10.6%. The fund’s performance was driven by technology (particularly semiconductors), construction-related industries (construction, materials, materials wholesalers, timber, etc.), and medical services. Insurance and specialty retailers suffered.
The latest monthly portfolio review strengthened finance, energy and industry, as well as consumer goods. Technology has been heavily reduced (especially semiconductors), as have materials and real estate.
The portfolio is overweight in banks, industry, and consumer discretionary, and underweight in IT, pharma and media.

Read the associated document

Chahine Capital

Macro update – July 2022

19 July 2022

Chahine Capital

Digital Stars Eurozone fund granted the Belgian « Towards Sustainability » label

19 July 2022

After the French Label ISR in March, Digital Stars Eurozone fund has been granted the Belgian « Towards Sustainability » label. This second sustainability label is a further recognition of Chahine Capital’s sustainable investment approach and its concrete achievements.

Delivered for a renewable period of one year, the « Towards Sustainability » label was developed by Febelfin, the Belgian federation of financial institutions, in collaboration with financial sector stakeholders and independent experts. The label has three requirements:
-Transparency;
– ESG (environmental, social and governance) analysis on all portfolios;
– Exclusions with low thresholds, not only on coal but also on non-conventional fossil fuels.

Read the associated document

Chahine Capital

Investment Monthly Report
June 2022

6 July 2022

Equity indices closed the final month of the first half of the year with a sharp decline (MSCI Europe NR -7.7%, MSCI USA NR -8.3%). Concerns about economic growth led investors to adopt a cautious stance. To counter inflation, which is no longer transitory, central banks have started a race against the clock. They are sharply raising interest rates and tightening monetary policy in order to slow down activity and bring down the price of energy and commodities, which are still the main contributors to price increases at this stage. The CRB All Commodities index thus dropped -5.2% in June, its biggest monthly decline since March 2020 and the Covid crash and allowed inflation expectations to ease sharply. The monetary tightening could be only temporary and a return to a more « Dovish » policy, as early as 2023, should not be excluded. Such a scenario would be favourable for equities in a medium/long-term perspective, while the technical secular supports (2000 and 2007 highs in Europe) remain valid, and valuation is attractive ahead of the Q2 quarterly publications.

Investors’ fears fluctuated between inflation, tightening monetary policy and a possible future recession. In this environment of strong risk aversion, cyclical stocks, including commodities and energy, which had benefited from positive momentum following the invasion of Ukraine and were well represented in our portfolios, suffered particularly badly, which means a new trend break for the year 2022. Only the defensive large caps limited their losses. The absence of a stable trend, the weak influence of news flow and company fundamentals on stock performances, logically constitute an unfavourable environment for our momentum approach. July will be marked by the announcement of half year results, a period that is usually favourable to our strategy, especially as the stocks in the portfolio continue to see their estimated profits revised upwards. The full month performance of Digital Stars Europe Acc is -13%, compared to -7.7% for the MSCI Europe NR. Digital Stars Europe Ex-UK Acc ended June at -13.6% compared to -8.2% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc achieved -9.9% against -9.2% for the MSCI EMU NR.

Influenced by the current risk aversion, the June rebalancing mainly included defensive stocks in the healthcare, food and telecoms sectors, but also some financials and energy stocks. We are selling mostly cyclical stocks in the industrial and technology sectors.

Digital Stars Europe is overweight basic materials, industrials, technology and energy. The overweight in basic materials is slightly lowered to 8%. The fund is underweight food and healthcare. The UK remains the largest country weight at 13.1%, ahead of Germany at 12.4% and France at 10.4%.

Digital Stars Europe Smaller Companies Acc ended down at -9.8% in June, but held up well against the sharp fall of small caps (MSCI Europe Small Cap NR at -11.8%). The drop came mainly from materials and industry (transportation). The relative strength of utilities, semiconductors and retail helped the fund, as did strong M&A activity during the month.
The monthly portfolio reviews focused on increasing the food, materials, utilities and media. Sales occurred mainly in technology, financials and industrials.
The portfolio is significantly overweight in energy, as well as in materials and utilities, and underweight in industry and real estate, as well as in health care.
The United Kingdom (the most largely underweight country) is the largest country weight with 21.6%, ahead of Norway with 14.8% (the most largely overweight country).

Digital Stars US Equities Acc USD ended down -9.6% in June, behind the MSCI USA NR at -8.3% and the MSCI USA Small Cap NR at -9.1%. The fund was particularly affected by some industrials, semiconductors, and construction-related stocks (construction, materials, materials wholesalers, timber, etc.). The financial sector performed well in relative terms.
The latest monthly portfolio review was quite defensive in nature, strengthening consumer staples and health care, and decreasing consumer discretionary (retailing) and industry.
The portfolio is overweight in banks, consumer discretionary and industry, and underweight in pharma and media.

Read the associated document

Chahine Capital

Investment Monthly Report
May 2022

8 June 2022

Nearly two and a half years after the discovery of the Coronavirus, we continue to observe a rare succession of major economic, monetary, geopolitical and health events, and this seems to have accelerated over the past year. On the health front, the Delta and Omicron variants have forced governments to implement the largest vaccination campaigns in history, and, in the case of China, to recently re-confine 300 million people. The war in Ukraine is emerging as one of the most important geopolitical events of the post-war era. Finally, powerful reflation, fueled by exogenous health and military shocks, is pushing central banks to adjust their accommodating monetary policies. In this unstable environment and lacking short-term visibility, equities gave up -0.8% in Europe in May (MSCI Europe NR). However, the earnings revisions by the analysts’ consensus continue to be well oriented (EPS 2022 MSCI Europe raised by +9.2% since the beginning of the year). The fundamental situation therefore remains favourable. The risk premium for the European market stands at +6.5%, well above the historical average of +5.0%.

Financial markets fell in early May. After Shanghai, new anti-covid measures were implemented in Beijing. The resulting negative impact of these lockdowns on global growth strongly affected Basic Materials stocks, one of the main overweights in our portfolios. The technology sector also corrected. Reassuring macro-economic figures in the US (industrial production, consumption) initiated a rebound that continued in line with the gradual lifting of the lockdown in Shanghai. The Digital Stars funds suffered in the first days of May before recovering. Digital Stars Europe Acc posted a month to date performance of -8.8% on 12 May, compared with -5.3% for the MSCI Europe NR. It then rebounded stronger than the index (+5.9% compared to +4.7% since 12 May), recovering part of the relative drawdown. The full month performance of Digital Stars Europe Acc is -3.4%, compared to -0.8% for the MSCI Europe NR. Digital Stars Europe Ex-UK Acc ended May at -2.8% compared to -1.1% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc achieved -1.6% against 0.6% for the MSCI EMU NR.

With oil prices still at their highest, the May rebalancing again included Energy and Paper Pulp stocks, but also Financials and Healthcare stocks. We are mainly selling “growth” stocks in the industrial sectors and real estate companies, which are suffering from higher interest rates.

Digital Stars Europe remains overweight in Basic Materials, Industrials, and Technology and is becoming overweight Energy. The overweight in commodities remains close to 9%. The fund is underweight in Food and Healthcare. The UK remains the largest weight at 14.7%, which is a clear underweight, ahead of Germany at 14.5% and Norway at 11.3%.

Digital Stars Europe Smaller Companies Acc ended down at -2.7% in May, behind the MSCI Europe Small Cap NR at -1.7%. The German government’s criticisms on biofuels affected VERBIO, preventing the fund from taking full advantage of the good performance of the energy sector. Some positive publications by companies in renewable energy, technology, finance and materials sectors benefited the fund.
The monthly portfolio reviews focused on materials, as well as healthcare, energy and industrials. Most of the sales concerned banks, and to a lesser extent consumer discretionary, software and food.
The portfolio is significantly overweight in energy and technology, and underweight in real estate and industrials.
The United Kingdom (the most largely underweight country) is the largest country weight with 19.1%, ahead of Norway with 17.5% (the most largely overweight country).

Despite a turbulent US market in May Digital Stars US Equities Acc USD ended the month flat, in line with the MSCI USA NR at -0.3% and the MSCI USA Small Cap NR at +0.1%. The energy sector was the best performer, but the fund benefited most from technology, particularly semiconductors. Conversely, real estate was a major detractor for the fund.
The latest monthly portfolio review strengthened technology, materials, industrials and consumer discretionary, and reduced financials, healthcare and energy.
The portfolio is overweight in industrials, retail and banks, and underweight in pharma, media and technology.

Read the associated document

Chahine Capital

Investment Monthly Report
April 2022

11 May 2022

Inflation is reaching record levels, interest rates are tightening, war is taking hold in Europe and 180 million Chinese are being confined, meanwhile, the MSCI Europe NR index has only lost -5.9% in the first 4 months, including -0.6% in April, and is far more resilient than the bond indices. The headwinds are numerous and logically weigh on the psychology of investors. The temptation to be puzzled is great in such a context, which is why we feel it is important to share the main elements and signals that can be extracted from our « Top-Down » analysis. Our Economic Momentum indicator has fallen in 3 months from 61 (out of 100) to 42. The consensus of economists now expects GDP growth in the Eurozone to be +2.9% in 2022, compared to +4.4% 6 months ago. Q1 growth was +0.2%, and still signals an expansion. The recession is only materializing at this stage in the collapse of the sentiment indicators, which are approaching their historical lows. The Zew Expectation Eurozone is close to the levels of October 2008, November 2011 and March 2020, all good entry dates for investors. Despite the pressure on long-term interest rates, the risk premium on the European equity market remains intact. The decline in indices, coupled with expected earnings growth of +11.6% in 2022 has compensated. Thus, the risk premium of the STOXX Europe 600 index stands at +6.5%, a generous level compared to the average since 2000 of 5.0%. It should also be noted that the 2022 Earnings Momentum remains surprisingly well oriented. Finally, the behavioural dynamics are deteriorating as the major international indices broke through their 200-day moving averages in April. However, the strength of the major European indexes’ support (2000 and 2007 highs), which was tested in early March before triggering a powerful rebound, is a positive signal for the medium/long term.

Relatively stable at the beginning of April, the financial markets fell violently at the end of the month due to the escalation of the Ukrainian conflict, the lack of prospects for a diplomatic agreement, but also the lockdowns in China following the rise in Covid cases. The expected negative impact of these lockdowns on global growth notably halted the rise in energy and basic materials stocks. Digital Stars funds ended April lower. Growth stocks, technology (especially semiconductors) and industrials were among the worst contributors this month. Defensive stocks (telecoms, food, utilities) are the winners. The monthly performance of Digital Stars Europe Acc is -2.3%, compared to -0.6% for the MSCI Europe NR. Digital Stars Europe Ex-UK Acc ended April at -3.0% compared to -1.3% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc achieved -3.0% against -1.9% for the MSCI EMU NR.

The rebalancing in April was influenced by the conflict in Ukraine and the lockdowns in China. The model therefore mainly included Basic Materials and Energy stocks in the middle of the month, but moved towards more defensive stocks (Telecoms, Healthcare, Utilities) at the end of the month. We are selling cyclical stocks in the industrial, semiconductor and financial sectors.

Digital Stars Europe remains overweight in Basic Materials, Industrials, Technology and Financials. The overweight in Basic Materials increases, again, to 9%. The fund is underweight in Food and Healthcare. The UK remains the largest weighting at 15.3%, ahead of Germany at 14.8% and Sweden at 10.9%.

Digital Stars Europe Smaller Companies Acc ended down at -2.5% in April, slightly behind the MSCI Europe Small Cap NR at -1.9%. Three sectors stood out in terms of performance: materials (K+S, Elkem), utilities (Telecom Plus) and food (Grieg Seafood, Tate & Lyle). Healthcare equipment (Medartis, Ypsomed), technology and transport (MPC Container Ships, Wallenius Wilhelmsen) were the most affected.
The monthly portfolio reviews focused on energy and financials, as well as materials and utilities. Most of the sales were in technology and industrials, and to a lesser extent in healthcare and consumer staples.
The portfolio is significantly overweight in energy and technology, and underweight in industrials, as well as in real estate, healthcare and media. The United Kingdom (the most largely underweight country) is the largest country weight with 19.9%, ahead of Norway with 14.3% (the most largely overweight country).

Digital Stars US Equities Acc USD ended April down -8.9%, vs. -9.1% for the MSCI USA NR, and -8.4% for the MSCI USA Small Cap NR. Despite this general downturn, retailing recovered partially in the fund, allowing it to mitigate the impact. Some stocks in the sector even finished the month positive (AutoNation, Penske Automotive, MarineMax). The sharp decline in semiconductors pushed some of its stocks out of the portfolio (Alpha & Omega, Synaptics).
The latest monthly portfolio review strengthened energy, materials and real estate, and reduced financials, consumer discretionary, media and healthcare.
The portfolio is still overweight in banks, industrials and retailing, and underweight in media, technology (software) and pharmaceuticals.

Read the associated document

Chahine Capital

Chahine Capital granted a record number of awards at Refinitiv Lipper Fund Awards 2022

6 May 2022

Chahine Capital, a European pioneer in quantitative equity Momentum strategies, has been granted this year more than a dozen of Refinitiv Lipper Fund Awards, one of the most prestigious
awards in the fund management industry.
Chahine Capital was granted the Best Group over 3 years award in the Equity Small Company category in five geographical areas: Europe, Austria, Germany, Switzerland and the UK.

Read the associated document

 

Source of the picture: https://www.refinitiv.com/perspectives/market-insights/celebrating-the-lipper-fund-awards-2022-winners/

Chahine Capital

Macro update – April 2022

19 April 2022

Chahine Capital

Investment Monthly Report
March 2022

5 April 2022

Equity indices rose in March (MSCI Europe NR +0.8%, MSCI USA NR +3.5%), above their pre-Ukraine invasion levels. The YTD drop in equities has been contained (MSCI Europe NR -5.3%, MSCI USA NR -5.3%) and this may seem surprising in a context where inflation is reaching high levels (+5.9% in the Eurozone, +7.9% in the US), and where a violent military conflict is taking place at the doorstep of Europe. However, a fundamental reading of the context justifies the robustness of the equity indices, which have proved to be much more resilient than the bond indices YTD. Global GDP growth should be around +3% according to economists’ forecasts, vs. +4% at the beginning of the year. At the same time, 2022 earnings expectations have been steadily revised upwards. In the US, the S&P 500 2022 EPS has been raised by +1.6% YTD, including +1.0% in March. In Europe, the expected 2022 EPS for the STOXX Europe 600 has risen by +7.0% YTD and +1.8% in March. This is due to the excessive conservative stance of analysts at the beginning of the year, but also to the significant increase in expectations in some sectors such as energy, mining and industrials. Earnings growth for 2022 stands at +9.5% on both sides of the Atlantic, and the equity risk premium remains attractive, despite the rate hike observed in March (+6.6% in Europe, vs. 5% historical average).

Although the war in Ukraine led to a violent correction in the equity markets in the first week of March, they then rebounded strongly on hopes of progress in the negotiations and a diplomatic way out. After two negative months, the Digital Stars funds ended the month up and outperformed their benchmarks, driven by the basic materials and energy sectors, which are more present in the portfolio. Growth stocks in technology (especially semiconductors), healthcare and industrials also rebounded, recovering some of the excesses of the market downturn, even as bond yields rose. The monthly performance of Digital Stars Europe Acc is +2%, compared to +0.8% for the MSCI Europe NR. Digital Stars Europe Ex-UK Acc ended March at +2.7% compared to +0.8% for the MSCI Europe ex UK NR.
Digital Stars Eurozone Acc achieved +1.7% against -0.7% for the MSCI EMU NR. This fund, which applies a reinforced ESG policy, obtained the French SRI label in March.

The rebalancing carried out in March were again influenced by the conflict in Ukraine. The model has therefore mainly included basic materials and energy stocks and to a lesser extent defensive stocks (food and telecoms). We are selling healthcare stocks, as COVID is no longer a major concern for investors, as well as some financials exposed to the Ukrainian crisis.

Digital Stars Europe remains overweight in Industrials, Basic Materials, Technology and Financials. The overweight in Basic Materials increases to 6%. The fund is underweight in Food and Utilities. The UK remains the largest weighting at 15.5%, but has been reduced; ahead of Germany at 14.8% and Sweden, up to 11.7%.

Digital Stars Europe Smaller Companies Acc ended up at +3.9% in March, significantly outperforming the MSCI Europe Small Cap NR at +0.7%. Most of the stocks in the portfolio performed well, in particular thanks to earnings publications. Unsurprisingly, energy, which is well represented in the fund, was the leading sector over the month. Technology stocks also performed remarkably well.
The latest monthly portfolio reviews have strengthened energy, as well as materials and utilities. IT and industry stocks were significantly reduced, as well as healthcare and finance.
The portfolio is significantly overweight in technology and energy, and underweight in industrials, real estate and media. The United Kingdom (biggest underweight) is the largest weight with 18.7%, ahead of Norway with 13.3% which became the biggest country bet following the energy push. 

Digital Stars US Equities Acc USD ended March down -2.1%, significantly underperforming the MSCI USA NR at +3.5%, and the MSCI USA Small Cap NR at +1.2%. The performance of the US market was driven by the energy and utilities sectors, both absent of the fund. And our worst sector contributions are mainly among our largest overweights, such as specialty retailing, or construction/homebuilding, or banks.
The latest monthly portfolio review strengthened consumer discretionary, materials and media, and reduced industrials and financials.
The portfolio is still overweight in banks, consumer discretionary and industrials, and underweight in technology (software), media and pharmaceuticals. Energy companies remain under-represented due to the widespread use among them of unconventional extraction techniques, which is prohibited as a result of the Socially Responsible Investing criteria of the fund.

Read the associated document

Chahine Capital

Investment Monthly Report
February 2022

10 March 2022

The beginning of 2022 will long remain engraved in our memories. It is indeed rare that such a succession of events can be observed during such a short period. While January saw yields rise sharply in anticipation of monetary normalisation, causing the second most powerful style rotation (in favour of value) observed since 2003, the Russian invasion of Ukraine suddenly reshuffled the deck. Against this backdrop, equity indices fell (MSCI Europe NR -3.0%, MSCI USA NR -3.0%) and the rotation in favour of cyclical sectors was interrupted. Even if it is risky to anticipate the evolution of the conflict at this stage, it is important to take stock of the fundamental situation of the indices in the event that an exit door is found. The risk premium on European equities stands at 6.9%, a very generous level compared to the 20-year historical average of 5.0%. Furthermore, central banks are now obliged to postpone monetary normalisation and the 0.50% easing in the German 2-year yield shows that investors are not mistaken. Finally, important decennial technical supports such as the 2000 and 2007 highs in Europe are now very close, which in theory argues for a strengthening of the asset class at these levels in a medium/long term perspective.

In this difficult environment, Digital Stars funds ended February 2022 down. As bond yields continued to rise at the beginning of the month, growth stocks suffered again. The Russian invasion of Ukraine had a negative impact on the financial and industrial sectors, while the energy and commodities sectors surged. Interest rates then fell sharply at the end of the month.

The monthly performance of Digital Stars Europe Acc is -5.2%, compared to -3% for the MSCI Europe NR. The relative drawdown of the fund is similar to what it experienced in 2014 and 2018. More generally, in the 23-year history of Digital Stars Europe, each rolling 5-year period has seen such a short term relative drawdown. The fund has then adjusted and closed the gap, strictly following the quantitative model. Digital Stars Europe Ex-UK Acc ended February at -5.4% compared to -4.1% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc achieved -6.5% against -5.2% for the MSCI EMU NR.

The rebalancing carried out in in February was heavily influenced by the sector rotation in January and the crisis in Ukraine. The strongest momentums were the stocks that passed these two periods favourably. The model has therefore mainly included basic materials stocks and to a lesser extent utilities and defensive stocks (food, telecoms). We continue to exit growth stocks and have stopped the integration of financials, which were badly impacted by the Ukrainian crisis.
Digital Stars Europe remains overweight in Industrials, Technology and Financials and is now overweight in Basic Materials, where exposure is up 3.2%. The fund is underweight in Food and Utilities. The UK remains the largest weighting at 18.7%, ahead of Germany at 13.4% and Italy at 12.2%.

Digital Stars Europe Smaller Companies Acc ended down at -3.5% in February, slightly outperforming the MSCI Europe Small Cap NR at -3.9%. Unsurprisingly, energy, which is well represented in the fund, posted the best performance over the month.
The latest monthly portfolio review has strengthened banks, as well as materials and food. Healthcare and industry were significantly reduced (especially in Sweden), as well as media, leisure and IT.
The portfolio is significantly overweight in technology and underweight in real estate and media. The United Kingdom (biggest underweight) is the largest weight with 19.2%, ahead of Italy (very underweighted) with 13.2%.

Digital Stars US Equities Acc USD ended February down -1.1%, significantly outperforming the MSCI USA NR at -3.0%, but lagging the MSCI USA Small Cap NR at -1.0%. The biggest contributors were among healthcare and industrial stocks. But it was technology that increased the positive difference with the market, notably through semiconductors and software.
The latest monthly portfolio review significantly strengthened banking, and reduced retail distribution.
The portfolio is now mainly overweight in banking, industrials (transport) and consumer discretionary, and underweight in technology, media and healthcare. Energy companies remain under-represented due to the widespread use among them of unconventional extraction, which is prohibited as a result of the Socially Responsible Investing criteria of the fund.

Read the associated document

Chahine Capital

Macro update – February 2022

5 February 2022

Chahine Capital

Podcast – Aymar de Léotoing with Argentum Asset Management

4 February 2022

– Market forecast – what do we expect to see in the markets this year?
– How does Chahine Capital respond to crises like a new coronavirus?
– What should our investor think of as a momentum strategy?
– What is special about your model in terms of market adjustment/flexibility?
– U.S. fund strategy – what sector weightings does Chahine Capital think are promising this year?
– Which sectors are the biggest key drivers in the Digital Funds Stars US Equities?

Discover the podcast of Aymar de Léotoing, portfolio manager.

Click here to listen to the podcast

Chahine Capital

Investment Monthly Report
January 2022

31 January 2022

Equity indices are entering 2022 with a first month of decline and a resurgence of volatility (MSCI Europe NR -3.2%, MSCI USA NR -5.7%). This is in stark contrast to 2021. In the United States, we have to go back to the “Covid crash” of March 2020 to find any trace of such a monthly underperformance of the equity indices. At the same time, significant sector and style performance differentials were observed on both sides of the Atlantic, extending the rotation in favour of Value that began last September. In Europe, the monthly performance spread between the “Visibility/Quality” style and the “Value” style is 14.5%. Since 2003, only the month of November 2020, when the vaccines were discovered, had revealed such a discrepancy according to our proprietary style indices. This rotation is justified by the awareness of the non-transitory nature of inflation and the now less accommodative stance of the Fed, and to a lesser extent the ECB. It also rectifies, albeit only partially, a fundamental configuration in which valuation differences between the various market segments appear excessive in the light of historical observations.

After an exceptional year in 2021 when returns exceeded 30%, Digital funds ended January 2022 with a significant decline.  The violent sector rotation had a negative impact on momentum stocks, particularly on technology, med-tech and healthcare equipment companies. High PE and high growth companies in the portfolio suffered from rising interest rates amidst fears of overvaluation, and this was not sufficiently offset by our cyclical stocks. Of course, this is not the first time we have experienced such a downturn due to mean reversion and the fund has historically proven its ability to adapt and recover. As rates stabilised at the end of the month and the earnings announcement period began, we saw some normalisation of the markets. The funds were able to recover a small part of their underperformance during the last week. The monthly performance of Digital Stars Europe Acc is -10.2%, compared to -3.2% for the MSCI Europe NR. Digital Stars Europe Ex-UK Acc ended January at -9.5% compared to -4.8% for the MSCI Europe ex UK NR. Digital Stars Eurozone Acc achieved -8% against -3.5% for the MSCI EMU NR.

While it is difficult to say whether the “value” trend will continue, the impact on momentum signals was strong enough to have an immediate influence on the last rebalancing made in January. The model has almost exclusively included value stocks, mainly financials, and has reduced exposure to the technology and healthcare sectors.
Digital Stars Europe remains overweight in Industrials and Technology (despite lower exposure), and becomes overweight in Financials, where exposure is up 4%. The fund is underweight in Food and Utilities. The UK remains the largest weighting at 19.5%, followed by Italy at 12.7% and Germany at 11.5%.

Digital Stars Europe Smaller Companies Acc ended down at -12.1% in January, underperforming the MSCI Europe Small Cap NR at -6.8%. The ongoing style rotation particularly affected technology and healthcare stocks. The winning sectors of the month were energy, banking and insurance.
The latest monthly portfolio review has significantly strengthened banks, as well as utilities and food, and significantly reduced healthcare and technology.
The portfolio is significantly overweight in technology and underweight in materials and real estate. Sweden’s weight is reduced to 17.2%, just behind the UK (18.7%), which is still very underweight.

Digital Stars US Equities Acc USD ended January down -13.4%, significantly underperforming the MSCI USA NR at -5.7% and the MSCI USA Small Cap NR at -8.0%. The violent style shift that began at the end of 2021 continued, but in a falling market, to the detriment of cyclical and growth stocks. In particular, our retail/apparel stocks, semiconductors and lending platforms suffered the most from the downturn.
The latest monthly portfolio review significantly strengthened banking, and reduced retail distribution.
The portfolio is now mainly overweight in banking, industrials (transport) and consumer discretionary, and underweight in technology, media and healthcare.

Read the associated document

Chahine Capital

Macro update – January 2022

5 January 2022