Stockholm (HedgeNordic) – Amidst turbulent times for Swedish and Nordic small-cap stocks, a standout performer has emerged: Alcur Select. Despite its significant exposure to small-cap stocks, Alcur Fonder’s long-biased long/short equity fund posted a gain of 4.4 percent in October. This performance brought its year-to-date performance further into positive territory at 4.6 percent.
“We had a month of extreme alpha because we had around 90 percent net exposure to small caps, which overall had a very poor month,” portfolio manager Wilhelm Gruvberg tells HedgeNordic. Swedish small-cap stocks endured two challenging months, with a monthly loss of 3.2 percent in October following a drop of 3.9 percent in September, as measured by Carnegie Small Cap Return Index Sweden.
“We had a month of extreme alpha because we had around 90 percent net exposure to small caps, which overall had a very poor month.”
“Small companies continue to be unpopular and we are approaching both a historically large underperformance relative to large companies and a decline in absolute numbers,” wrote the team at Alcur Fonder in their recent letter to investors for September. “Fundamentally, we now find more companies worth buying than normal, at historically low valuations,” the team added. Following further declines in October, Swedish and Nordic small-caps have become even more appealing.
“We think the current market offers very good alpha opportunities,” emphasizes Gruvberg. The Alcur Fonder team highlighted the historical trend of small companies outperforming larger ones in terms of profit growth. They continue to hold the view that profit development drives share prices over the long term and that it is easier to find interesting profit growth opportunities among smaller companies.
“We think the current market offers very good alpha opportunities.”
In October, Alcur Select delivered its best monthly performance of the year, with its 4.4 percent advance bringing the year-to-date performance to 4.6 percent. Gruvberg noted the noteworthy contributions from the short positions in Kinnevik and JM, as well as strong performances from long positions in Alleima and Stolt Nielsen. During October, investment company Kinnevik saw its share price decline by 13 percent, while the developer of housing and residential areas, JM, experienced a roughly 20 percent drop despite a slight rebound in early November.
Alcur Select’s 4.6 percent year-to-date advance through the end of October outperformed the Carnegie Small Cap Return Index Sweden, which saw a decline of 6.1 percent. Since its launch in May 2018, Alcur Select has delivered a cumulative return of 187 percent, in contrast to a return of 45.9 percent for the Carnegie Small Cap Return Index Sweden. This translates into an annualized return of 21 percent for Alcur Select. The fund has maintained an average net exposure of around 85 percent since its inception and exhibited lower risk, as measured by standard deviation, compared to the benchmark index.
