Highwood Value Partners H2 2024 Letter To Investors
2025-02-03 06:00:00 ET
Summary
- Our portfolio was down 1% in H2 2024, but up 59.7% since inception, outperforming the MSCI Europe SMID Cap index's 29.5% gain.
- European equities have underperformed US equities due to US tech sector growth, but select European markets now offer attractive low valuations.
- Recent portfolio changes include selling STO SE and Naked Wines, and investing in Fevertree Drinks PLC and HelloFresh SE, both high-quality, undervalued businesses.
- Future strategy includes potential expansion to all developed markets, team growth, and exploring options for US investor participation.
Dear Investors,
During the second half of 2024, our portfolio was down 1% in Canadian dollars net of fees 1 which brings our return since inception to +59.7% in Canadian dollars net of fees. This compares to the performance of the most relevant benchmark index, the MSCI Europe SMID Cap index, which was up 1% in the second half of 2024 and is +29.5% since the date of our inception.
The table below gives you the usual summary of our performance and exposure by strategy bucket for the second half of 2024 and the relevant periods since inception.
Time Period | Return, Net of Fees 1 | Exposures by Strategy Bucket | |||
Total Equity | Core Value Equity | Special Situation Equity | Cash | ||
FY 2019 2 | 2.0% | 41.1% | 36.0% | 5.1% | 58.9% |
FY 2020 | 25.9% | 78.1% | 70.6% | 7.5% | 21.9% |
FY 2021 | 7.4% | 84.1% | 80.8% | 3.3% | 15.9% |
FY 2022 | -14.1% | 95.6% | 79.9% | 15.8% | 4.4% |
FY 2023 | 28.9% | 95.9% | 79.2% | 16.7% | 4.1% |
FY 2024 | 4.6% | 97.2% | 74.8% | 22.4% | 2.8% |
Total Return, Since Inception | 59.7% | ||||
Average 3 , Since Inception | 9.7% | 83.1% | 70.6% | 12.5% | 16.9% |
1 Returns presented are the returns of the Highwood Value Partners Client Composite. 2 Inception on December 9, 2019 3 Average Return presented is the Annualized Return of the Highwood Value Partners Client Composite. |
In this letter, I will provide an analysis of European equities given their sharp underperformance vs US equities over the past one, three and five years. I will then discuss the changes to the portfolio in the past six months and provide a business update. I will then move on to the usual business of summarizing the developments at each portfolio company over the past six months. This is a longer letter than usual which is because I have more to say and I hope you can take the 15 minutes to so required to read it....
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Highwood Value Partners H2 2024 Letter To Investors
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