SKAGEN Global. Status Report September 2013

Transcription

1 SKAGEN Global Status Report September 2013

2 Summary September 2013 SKAGEN Global performed in line with its benchmark index in September. The fund and MSCI All Country Word Index were both up 1.9 percent measured in SEK. Year-to-date, SKAGEN Global is up 10.1 percent, which is 2.9 percentage points behind the index. Korean chemical company OCI and Brazilian homebuilder Gafisa entered the portfolio in September. In addition, we increased our position in Nordea, which is now the 4 th largest investment in the fund, and added to our position in Ensco. We reduced the position in Noble, Oracle and TE Connectivity. The net cash position in SKAGEN Global decreased from 4.0 percent to 2.3 percent in September. The aggregate weight of the top 10 holdings decreased slightly from 31.0 percent to 30.9 percent of the fund. SKAGEN Global currently holds 104 companies. Gazprom (2.5 percent weight) was the best contributor to absolute performance in September (up 12.1 percent in USD). Samsung Electronics (6.9 percent weight) was the worst contributor (down 4.7 percent in KRW). The SKAGEN Global portfolio remains attractively valued both on an absolute and relative basis. The fund s top 35 holdings trade at a weighted Price/Earnings ( 13e) of 8.8x and a Price/Book of 1.1x. Valuations of equities remain attractive. Both Price/Earnings and Price/Book multiples are below historical averages. Relative to bonds, stocks stand out as particularly cheap. Dividend yields on equities are currently high relative to bond yields. We have in recent months received mixed signals regarding the macroeconomic situation in several emerging economies: China, India and Brazil in particular. The housing market and car sales statistics are pointing to higher than expected growth in the US. Europe is still struggling with recession in many countries, but we are now seeing positive, albeit low, growth overall. We still believe there is a good chance that global GDP growth in 2013 exceeds growth in Strong corporate balance sheets combined with more macroeconomic visibility should be supportive for increased M&A activity and more cash returned to shareholders (via dividends and share buybacks). 1 1

3 September 2013 Results SEK, net of fees SKAGEN Global World Index (SEK) Septemberr QTD YTD 1 Year 3 years 5 years 10 Years Since inception* SKAGEN Global 1,9% 2,4% 10,1% 15,0% 8,2% 7,8% 12,6% 15,5% MSCI AC World Index* 1,9% 2,4% 12,9% 15,3% 8,3% 5,4% 5,3% 2,8% Excess return 0,0% 0,0% -2,9% -0,3% -0,2% 2,4% 7,3% 12,7% Note: All returns beyond 12 months are annualised (geometric return) * Inception date: 7 August 1997 ** Benchmark was MSCI World Index from 7 August 1997 to 31 December 2009 and MSCI All-Country Index from 1 January 2010 onwards 2

4 Annual performance since inception (%)* SKAGEN Global has beaten the benchmark 14 out of 16 yrs Percent 135 SKAGEN Global* (EUR) MSCI AC World (EUR) YTD Note: All figures in EUR, net of fees * Inception date: 7 August 1997 ** Benchmark index was MSCI World in NOK from 7 August 1997 to 31 December 1997 and MSCI All-Country Index from 1 January 2010 onwards 3

5 Markets in September in EUR (%) Percent Spain Turkey Brazil India Russia Germany Japan France Italy South Africa Sweden South Korea MSCI EM Index Singapore Netherlands Hong Kong United Kingdom China (Hong Kong) Poland SKAGEN GLOBAL Denmark MSCI AC Index USA (Nasdaq) China (Local) Canada Taiwan Mexico USA (S&P 500) Norway (OSEBX) Indonesia

6 Markets 2013 YTD in EUR (%) Percent Japan USA (Nasdaq) Sweden France Spain USA (S&P 500) Denmark Germany Netherlands MSCI AC Index Italy United Kingdom SKAGEN GLOBAL Taiwan Norway (OSEBX) Hong Kong Canada China (Local) Thailand Singapore South Korea South Africa Russia Poland MSCI EM Index China (Hong Kong) Mexico India Turkey Indonesia Brazil

7 Main contributors, September 2013 Largest positive contributors Largest negative contributors Company NOK (m) Company NOK (m) Gazprom 99 Renault 81 Akzo Nobel 71 Banrisul 58 Vinda 55 Heidelbergcement 50 Dixons Retail 50 Eletrobras 48 Siemens 48 Roche 46 Samsung Electronics -93 Ternium -26 Ensco -23 Microsoft -21 Teva Pharmaceutical -19 LG Electronics -17 CTC Media -9 Bunge -8 REC -7 Citigroup -7 Total value creation September 2013: NOK million Note: Contribution to absolute return 6

8 Main contributors, 2013 YTD Largest positive contributors Largest negative contributors Company NOK (m) Company NOK (m) Citigroup 606 Renault 345 Tyco International 289 AIG 278 Samsung Electronics 269 Roche 256 Toyota Industries 251 Weatherford 227 OMV 219 Microsoft 204 State Bank of India -110 Indosat -92 Mosaic -62 EMGS -56 ADT -34 Bank Asya -25 EFG-Hermes -24 Norsk Hydro -21 Albaraka -12 Kazmunaigas -8 Total value creation 2013 YTD: NOK million Note: Contribution to absolute return 7

9 Holdings increased and decreased, September 2013 Key buys during September Nordea Bank became a top 10 position (2,5 percent of the fund) following an increase in weighting in connection with the Government of Sweden selling out their remaining shares (7% of market cap). We believe higher cost efficiency, lower loan losses and higher interest margins in Norway and Finland will drive RoE from current 11 percent to percent in a two year time frame. We also expect higher dividends going forward due to the strong capitalisation of the bank. Our price target is SEK (+ dividends). Ensco s weighting was increased in September. In our opinion, the company s current valuation vs. Noble exhibits a lack of appreciation by the market of the higher quality assets and management of Ensco. OCI was introduced as a new holding in September. A long period of oversupply in the polysilicon industry has led to profit decline and a massive de-rating in the valuation of OCI. Thus, at the current share price, we are not paying for the polysilicon business in OCI. As production costs have come down significantly, solar is now costcompetitive with electricity generated from fossil fuels on an unsubsidised basis. We think the markets fails to see how big an impact this will have on demand removing the oversupply situation in the industry. Key sells during September Noble was reduced in September. We believe Ensco s valuation is more attractive given the better quality of its assets and management vis a vis Noble. Oracle was reduced in September. Our research has made us increasingly concerned about industry growth and margins in the move towards cloud computing. This has also been supported by somewhat disappointing results over the past year due to a lack of new software sales. We still see upside in the stock, but with less conviction in our initial investment thesis. TE Connectivity was reduced in September. The company has done well on an operational basis, but the share price has increased more in proportion, leading to a higher valuation. Thus, we see less upside potential. Our holding in Gafisa was also initiated in September. Gafisa is one of Brazil s leading developers. The share prices of the company and its Brazilian peers have been depressed for a long time due to poor macro development and bad investment decisions made in previous years. After Gafisa sold the majority of its subsidiary, Alphaville, this summer, the company is in excellent financial condition with debt/equity ~0,5. The share is trading below 0,5x tangible book value and should offer meaningful upside when earnings recover, as low margin projects run off over the coming two years. 8

10 Most important changes, 2013 YTD Holdings increased Holdings reduced Q1 Surgutneftegas Mosaic (new) Vinda International (new) China Unicom Bunge Technip (new) Lundin Mining Q1 Pentair (out) SCA Pfizer Eletrobras Gjensidige Forsikring TE Connectivity Q2 Sberbank RSA Insurance Group State Bank of India (new) Prosegur (new) Nordea Bank (new) Philips (new) Q2 Pfizer (out) SCA Gjensidige Forsikring Sabanci Holding Toyota Industries Oracle Q3 AIG Vale (new) Ensco LG Corp Tata Motors (new) Nordea Bank Gafisa (new) OCI (new) Q3 Nabors Industries (out) TRW Automotive (out) Toyota Industries Siemens SCA (out) TE Connectivity 9

11 Largest holdings SKAGEN Global, end of September 2013 Holding Price P/E P/E P/BV Price size, % 2013e 2014e last target SAMSUNG ELECTRONICS CITIGROUP TYCO INTERNATIONAL NORDEA BANK GAZPROM CHINA UNICOM AIG RENAULT LG CORP VIMPELCOM Weighted top % Weighted top MSCI AC World

12 SKAGEN Global sector and geographic weighting vs index Sector distribution Energy Geographic distribution 18 Asia ex Japan 9 Fund Index Raw materials 6 9 EMEA 5 9 Industrials Frontier Markets 2 0 Consumer discretionary Japan 3 8 Consumer staples 3 10 Core EU Health 4 10 North America Banking & Finance Norway 0 3 IT Peripheral EU Telecom 4 8 South America 5 2 Utilities 1 3 Oceania 0 3 Cash 0 2 Cash

13 Key earnings releases and corporate news, September 2013 Dixons Retail (0.8%) Reported Q1 trading statement and divestment of Pixmania and Electroworld Turkey Summary: Dixons provided good LFL sales development in UK (+6 percent YoY) and the Nordics (+5 percent YoY) but sales remain sluggish in Southern Europe (-12 percent YoY). More importantly, the loss-making businesses, Pixmania and Electroworld Turkey, were divested at better than expected conditions. The decline of gross margin of 0.4 percent was slightly negative. Implications: Our investment case is playing out. Loss-making businesses are being sold (Italy remains) and Dixons stands firm as the undisputed market leader in UK/Nordics. Valuation is starting to get demanding. Microsoft (1.8%) Buys Nokia Mobile devise and services business for EUR 5,4bn in cash Summary: Microsoft decided to use less than 15 percent of its cash pile to buy Nokia. The vision is to gain 15 percent market share in mobile phones in When the deal was announced, the market cap. of Microsoft declined more than EUR 10bn; it is clear that the market does not believe that Nokia will be a value accretive acquisition. Implications: We tend to agree with the market. Looking at the history of Microsoft, it is less likely that the company will succeed in its mobile strategy. We view the Enterprise divisions in Microsoft as the most valuable part of the company and will not place much value in Mobile (or Surface) seeing is believing. We still find the valuation of Microsoft compelling. Vivendi (0.5%) Our thesis about a split of the company is playing out Summary: After announcing two major divestments in July, Vivendi s supervisory board decided to launch a study to split the group into two separate companies. A media company and a telecom company (SFR in France) Implications: The investment thesis is playing out. After fixing the balance sheet, Vivendi is moving forward with crystallising value for shareholders. Aside from still trading at a discount to peers, we continue to see opportunities for selling other assets in the new media company just as SFR (telecom in France) is an obvious M&A candidate. Rhoen Klinikum (0.8%) Announced an agreement to sell the majority of its hospitals to Fresenius Summary: Rhoen announced that it will sell 43 hospitals to Fresenius for a total consideration of EUR 3,07bn. The price represents 1.6x sales (2013) and 12x EBITDA (2013) and seems to be attractive for Rhoen shareholders. The company will keep 4 hospitals, including the University Hospital Giessen-Marburg. The new Rhoen will have pro forma revenues (2012) of EUR 984mn and EBITDA of EUR 97 mn. The intention is to return EUR 13.80/share to shareholders in Implications: The end game of the special situation in Rhoen Klinikum seems to be attractive for Rhoen shareholders. With the same valuation multiples for the remaining hospitals, fair value of the company is EUR 24/share. Withholding tax issues for shareholders could be a concern. 12

14 Key earnings releases and corporate news, September 2013 (cont.) Vinda International (0.5%) Oracle (1.9%) Gazprom (2.5%) SCA launched a takeover bid for the company at HKD 11/share Summary: SCA (which owns 21,68 percent of Vinda) launched a tender offer to buy Vinda at HKD 11/share in cash. The price represents a premium of 38 percent compared to the closing price the day before launch P/E (2013e) of 19x and Price/book of 2,5x Implications: As Vinda has delivered slightly disappointing results in 2013 (profit warning in June), the valuation at HKD 11/share seems fair currently. We see the rationale for SCA to take over Vinda, as it offers long term growth opportunities in the growing Chinese market for paper-based hygiene products. We will most likely accept the bid and take a profit of >10 percent compared to our initial investment (made in Q1 2013). Reported better than expected sales of new licenses, but delivered a muted outlook for Q2 Summary: Oracle reported revenue growth of 5 percent, in-line with expectations. Software revenue did slightly better than expected (and especially new software license sale) whereas the hardware business declined more than expected. The change in mix (more high margin software) resulted in operating profit beating expectations. Oracle repurchased 92.8M shares in the quarter for $3B, returning nearly 90 percent of FCF to shareholders over the last year. The company also announced its plan to launch an in-memory option for Oracle database (to compete with SAP s Hana product). Implications: We have taken down our position as we have become increasingly more concerned about industry growth and margins in the move towards cloud. Thus, it was good to see new software sales doing well. The capital return discipline was also a key positive given our investment case - the market is mispricing the company s strong and stable cash flow. Reported Q1 headline Ebitda ahead of expectations, while net profit was slightly below Summary: Revenues increased 19 percent YoY due to strong gas demand in Europe. EBITDA of RUB 1,46 tn was well above expectations, but the beat was mainly due to reversal of provisions. Free cash flow was RUB 115bn in Q1. Implications: The results revealed a decent start to the year with no big surprises. Higher than expected demand in Europe, progress in the Chinese negotiations, and hike in dividends remain important triggers. CapEx level for the rest of 2013 is a main concern, as the company has a long tradition of increasing these expenditures to the level of operating cash flow. Low valuation (P/E~3x) continues to provide downside protection Mosaic (0.7%) Lowered Q3 guidance for the results in both its Phosphates and Potash divisions Summary: The profit warning was not a big surprise after potash prices and volumes have eroded after the break up of the Belarusian Potash Company ( the Uralkali story we described in the July report). Potash sales volume was revised down from 1,8-2,1Mt to 1,45-1,65Mt. Prices are expected to be in the $ /Mt range and gross margin is expected to be in the low 30 s. Phosphate volumes and prices were also revised down and Mosaic expects Phosphates gross margin to be in the mid teens. Implications: The break-up of the Eastern European Potash cartel represent a huge risk in the development of the potash market going forward. We have seen a number of initiatives to reestablish the cartel and improve market balance, but we will not factor this in to our expectations. The capital release trigger remains intact. We have lowered our fair price assumption for our Mosaic shares. 13

15 The largest companies in SKAGEN Global Samsung Electronics is one of the world's largest producers of consumer electronics, with employees. The company is #1 globally in mobile phones and smartphones, the world's largest in TV and the global leader in memory chips. Samsung also produces domestic appliances, cameras, printers, PC's and air conditioners. Citi is a US financial conglomerate with operations in more than 100 countries worldwide. The bank was bailed out by the US government during the credit crisis and subsequently raised USD 50bn of new capital. The group consists of two units: Citi Holdings which is a vehicle for ca. USD 500bn of assets that are to be run down and sold, and Citicorp which is the core of the going concern business. 60 percent of Citicorp revenues are derived from outside the US - mainly in emerging markets. Tyco International is a Swiss-based and NYSE-listed company focused on fire and security solutions for companies and government entities. It is the market leader in most of the segments it operates in. Approximately 42 percent of revenues are derived from services with the remainder coming from equipment sales. 48 percent of revenues come from North America, 27 percent from EMEA, 20 percent from APAC and 5 percent from Latin America. Nordea has the pole position in the Nordics with 11,2mn retail costumers and 625 thousand corporate clients. It is a market leader (1 st or 2 nd ) in every Nordic country. Nordea is the largest Nordic asset manager/wealth manager with EUR 224bn in AuM (EUR 138 bn in managed funds). It is the most diversified amongst its Nordic peers. Total loans are EUR 346bn with the following split: Finland 27 percent, Sweden 26 percent, Denmark 24 percent, Norway 18 percent, and Baltics/Poland/Russia 5 percent. Gazprom is the world s largest gas producer with proven gas reserves of 550bn m3 (10 percent of global reserves and equivalent to 30 years reserve life). The company controls 160k km of gas pipelines and significant storage capacity. It owns and operates Russia s entire high pressure gas transportation network, and accounts for 28 percent of gas supply in Europe. Gazprom is also the 5th largest oil producer in Russia with production of 0.87m boe (9 percent of Russian output) and Russia s largest power utility with 36GW of installed capacity. 14

16 The largest companies in SKAGEN Global After the merger with China Netcom and disposal of CDMA in 2008, China Unicom is now a full service provider, offering both fixed-line and mobile (GSM and WCDMA) services. China Unicom has 222mn mobile subscribers, 93mn fixed line subscribers, and 61mn broadband subscribers. The Chinese government owns 75 percent of the company. The company is listed in Hong Kong and also has a fairly liquid ADR in New York. AIG is an international insurance company serving commercial, institutional and individual customers. The company provides property/casualty insurance, life insurance and retirement services. AIG was at the very center of the financial crisis as a systemically critical provider of mortgage insurance, requiring a USD 180bn bail-out by the US government. The company has two core insurance holdings, Sun America and Chartis, which it intends to keep. The company is targeting 10 percent ROE by Renault is a leading manufacturer of automobiles through brands like Renault, Dacia and Renault Samsung Motors. It holds ownership stakes in Nissan (43,4 percent), AvtoVaz (25 percent) and Daimler (1,55 percent). It has also built up sizable operations in Russia, Turkey, North Africa and Brazil. Renault is also a leader in Electrical Vehicles and holds a 2-3 year lead vs competitors. Renault is debt free and its ownership stake in Nissan is alone worth more than the market cap of Renault. LG was founded in 1947 as Lak-Hui Chemical Industrial and renamed Lucky. It established electronics manufacturer Goldstar in 1958, rebranding as Lucky Goldstar (LG) from It is the holding company of the LG chaebol (Koo family owns 27 percent), with stakes of 34 percent in LG Electronics, 33.5 percent in LG Chemical, 36 percent in LG Uplus (telecom), 34 percent in LG Household & Healthcare, in addition to stakes in LG CNS, LG Solar, LG Sports, LG Innotek and other non-listed and real estate assets. VimpelCom is one of the world s largest integrated telecommunications services operators offering a wide range of wireless, fixed, and broadband services in Europe, North America, Russia, Ukraine, the Commonwealth of Independent States (CIS), Africa, and Asia. The company is headquartered in Amsterdam, the Netherlands and listed on the New York Stock Exchange. The two main shareholders are the Norwegian telecom company, Telenor, and Altimo the telecoms investment arm of Russia's Alfa Group, controlled by Russian oligarch Mikhail Fridman 15

17 OCI Corp. ( KS) KRW OCI has a reasonably stable business in Petro & Coal Chemicals (35% of 2012 sales) and in inorganic chemicals (38% of 2012 sales) The last segment, Polysilicon, is the main swing factor for earnings and the stock price With 42k tons of capacity, OCI is #3 global player with 9% of global supply. Due to aggressive supply growth among the top players, prices have come down aggressively and most companies are operating at a loss (including OCI) With lower production costs across the supply chain, solar is now approaching parity with other clean energy sources Combined with supportive measures in China and Japan we think this will lead to a significant increase in demand and prices With a high fixed cost base, operating leverage is significant With current valuation, we are buying OCI s polysilicon capacity significantly below depreciated book value. OCI has a significant pipeline of solar power projects in the US and Korea (a new segment) The company has a sizeable and valuable land bank they are developing. Catalysts: Higher Polysilicon prices Adding polysilicon capacity from improved effeciency Success in Solar power business IPO of Chemical business crystalizing value of that business Key figures: Market cap: USD 3.3bn Net debt USD 1.5bn No. of shares: 23.8m P/E (13e): n.m. P/E (14e): 18.2x P/BV (last): 1.2x RoE (14e): 6.3% Div. Yield (13e): 1.0% Daily trading volume of 182k shares or USD 23m. Chairman Soo-Young Lee and family owns 25.6%, Capital Group 6.9%, Mirae 6.4% 27 analyst coverage; 8 Buy, 13 Hold, 6 Sell. Avg. price target KRW 154k. Risks: protectionism, higher poly supplies from China, solar incentive policies, power business fails, failure in the capital intensive solar power projects

18 OCI a stable chemical company with a volatile solar business 2012 revenue breakdown Polysilicon business Polysilicon, is the main swing factor for earnings and the stock price (currently loss making) With 42k tons of capacity, OCI is #3 global player with 9 percent of global supply With a high fixed cost base, operating leverage is significant 17 17

19 Polysilicon is the part of the supply chain with barriers to entry 18

20 Polysilicon demand in 2012 was 181,000 MT While Tier 1 production capacity was 230,000 MT. 19

21 The result: Polysilicon Spot Price $/kg

22 and valuation of OCI Price / Book

23 We buy OCI s polysilicon capacity at 0.2x depreciated book value USD mm Chemical 6x EV/EBITDA Real estate (at fair value) Value of other assets (at cost) 800 EV ex. Polysilicon Current EV Implied value of Polysilicon assets 600 net PPE in Polysilicon Implied price / book

24 just as solar reach parity vs. other types of clean energy 23

25 Increased demand (and no new supply) will affect prices 24

26 Nordea Bank (NDA SS) SEK 77 Key numbers: MCAP: SEK 312bn Core Tier 1: 10.2% (Core Tier1 excl. transition rules:14.0%) Shares out.: 4.05mn P/E ( 13e): 11.0 P/E ( 14e): 10.0 P/E ( 15e): 9.0 Price/book: 1.3 Price/tbook: 1.5 RoE (`13e): 11.3% (target: to deliver RoE of 15% by 2015) Dividend(`13e): 4.7% (pay-out ratio>40%) Largest owners: Sampo: 21.4% No 1 position in the Nordics with 11,2mn retail costumers and 625` corporate clients. Holds no. 1 or 2 positions in every Nordic country Largest Nordic Asset manager/wealth Manager with EUR 224bn in AuM (EUR 138 bn in managed funds) Most diversified among its Nordic peers. Total loans: EUR 346bn Finland: 27% Sweden: 26% Denmark: 24% Norway: 18% Baltics/Poland/Russia: 5% Total assets: EUR 662bn, employees, 948 branches Deposits/loans ratio: 57,5% Cost/income ratio: 50% - committed to improve c/i ratio further by reducing costs by 450mn in Operating profit 2012: 4,1bn (44% Retail banking, 37% Wholesale banking, 16% Wealth Management, 3% Other) Impaired loan loss ratio: 181bp (43% is non-performing). Provisioning ratio: 43%. Loan loss ratio 2012: 0,23%. Shipping = 2,1% of total lending Triggers: Will have excess capital of 6bn by Should lead to increased pay-out ratio and share buy backs. Cash dividends will be preferred (Bjørn Wahlroos) Sampo should be viewed as an pragmatic/opportunistic owner with regards to M&A deals. Delivering on 2015 targets (RoE of 15% with normalised interest levels) should push price/book valuation close to 1,5. More normalised net interest margin. Improved credit quality in Denmark/shipping. Risks: Overall macro conditions in the Nordic area Oil price/falling property prices in Norway Cost inflation (labour & IT) 25

27 Credit quality 26

28 Shipping and retail Denmark have been the problem areas. 27

29 Nordea the only true Nordic bank 28

30 NIM is picking up in Norway and Finland 29

31 Nordea the road to overcapitalization 30

32 Gafisa (GFSA3 BZ) 3.10 BRL Gafisa develops and sells condominiums throughout Brazil. The company has expanded rapidly in terms of geography and segments (moved into lowend segment) via aggressive M&A Gafisa realise they have expanded too fast and too wide, making execution slip The remaining low margin projects will be sold in 2013 and 2014 Cashflow will be at break even in 2013 (need to buy land) before turning positive in Driven by lower working capital (inventory and receivables) - Cash will be used to reduce debt level Gafisa sold 70% (owned 80%) of Alphaville for BRL 1.4 billion to Patria and Blackstone in June this year. Adjusting for the BRL 367 used to buy back the last 20% from the founders, the transaction will create a net cash in-flow of BRL 1bn (USD 466 million). Gafisa is left with 30% of Alphaville, valued at 270 million USD Triggers As unprofitable projects run off over the coming 2 years, overall earnings will improve significantly (all analyst use current ROE and compare it to current PB and thus see limited upside) Paying down debt (with proceeds from Alphaville and improved cash flow) will reduce the high risk premium the market is currently pricing in Using part of the proceeds from sale of Alphaville to buy back shares Info Last price 3.10 Market cap USD 579 m Vols in USD 15 m - Vols in ADR 5 m Net debt USD m PE 13e 26.7x PE 14e 7.4x EV / EBITDA 13e 9.1 x EV / EBITDA 14e 7.8 x Divi yield 13e 0.7 % PB (last) 0.5 x ROE 13e 2 % ROE 14e 6 % Risk Having to sell inventories of low margin projects at even lower prices to clear out inventories Not cutting cost in-line with the downsized business scope General macro weakness in Brazil 31

33 For more information please visit: Our latest Market report Information on SKAGEN Global on our web pages Historical returns are no guarantee for future returns. Future returns will depend, inter alia, on market developments, the fund manager s skill, the fund s risk profile and subscription and management fees. The return may become negative as a result of negative price developments. SKAGEN seeks to the best of its ability to ensure that all information given in this report is correct. However, it makes reservations regarding possible errors and omissions. Statements in the report reflect the portfolio managers viewpoint at a given time, and this viewpoint may be changed without notice. The report should not be perceived as an offer or recommendation to buy or sell financial instruments. SKAGEN does not assume responsibility for direct or indirect loss or expenses incurred through use or understanding of the report. Employees of SKAGEN AS may be owners of securities issued by companies that are either referred to in this report or are part of the fund's portfolio.