When your portfolio holds six names, one big winner can move the needle in a major way. For Accendo Capital, September proved just that. A soaring share price in Finnish cybersecurity firm SSH Communications Security more than offset declines elsewhere, lifting the activist fund 22.6 percent for the month and pushing its year-to-date gain to 22 percent, enough to rank among the top ten performers in the Nordic hedge fund universe this year.
The catalyst came on July 1, when SSH Communications Security announced a strategic partnership with Leonardo S.p.A., an Italian aerospace and defense group with a €32 billion market value. As part of the deal, Leonardo committed to invest €20 million in SSH through a directed share issue at €1.50 per share, a 49.6 percent premium to the prevailing market price at the time. Investor excitement quickly followed. SSH’s share price more than doubled to €4.88 during the month of September, reflecting growing anticipation around the transformative partnership.
“September delivered strong performance, driven by increased investor and media attention to SSH in anticipation of the Leonardo partnership,” said Mark H. Shay, Accendo’s Senior Partner based in Stockholm. “Leonardo’s executive management visited Finland and provided inspiring comments to the media on the planned co-operation,” he added. “We anticipate soon Finnish regulatory approval of the share issue to Leonardo, which will make them a 24.6 percent owner, while Accendo will hold 20.9 percent, down from 27.7 percent today.”
“September delivered strong performance, driven by increased investor and media attention to SSH in anticipation of the Leonardo partnership.”
Mark H. Shay, Senior Partner at Accendo Capital.
Accendo’s position in Remedy Entertainment, the Finnish video game developer, gained nine percent in September. The rest of the portfolio, however, moved in the opposite direction. Hexatronic, now the fund’s third-largest holding, fell 17 percent after issuing a cautious outlook for its Fiber Solutions segment, where it is scaling back costs and capacity. The company expects stronger growth ahead in its more differentiated Data Center and Harsh Environment segments, supported by continued mergers and acquisitions (M&A) activity.
After facing headwinds in recent years, largely due to share price weakness in Hexatronic, Accendo’s concentrated portfolio naturally produces both standout months and weaker ones. What ultimately matters, however, is Accendo’s long-term track record and the team’s ongoing work to create lasting shareholder value across its holdings through activism and strategic influence. Accendo Capital marks 18 years of activist investing in the Nordics this coming spring and has averaged 10 percent net annual returns since inception.
