French Hidden Champions portfolio end of year recap

Portfolio recap and thoughts

You will find thereafter the French Hidden Champions portfolio. Updates will happen from time to time if there is something of interest to discuss.

French Hidden Champions Portfolio as of the 28th of December 2021

For the US and Canadian shares, stock price takes into account rate of exchange.

Color blocks indicate companies belonging to the same group (Bolloré, Luc Tack and Constellation Software).

French Hidden Champions portfolio ranked by weight

Compagnie de l’Odet and Financière Moncey represent 91% of the investments in the Bolloré galaxy thesis

17 holdings and top 5,10 and 15 weight

Priority will be given to companies which I can follow locally, where I have a network of fellow investors (whom I consider as friends), where I can see the management and do scuttlebutt. I have one mentor (who likes to remain very discreet), some fellow investors whom I consider as friends and two fund managers whom I respect a lot. They help me to improve a lot.

Downside protection is based on a solid balance sheet (net cash position or low level of financial debt),honest and capable management, good treatment of employees and where employees are incentivized and business models which I think can face the test of time. I want to sleep well so when I am too worried about a company my spider senses are telling me that something must be done. Usually it is linked to the quality of the business or to a management team which hasn’t shown in the past that they will treat minority shareholders fairly. You will see that I am not a fan about cyclical companies because I am just not good enough to understand the cycles.

Business model+ management (capital allocation skills) are essential. Being a minority shareholder I must trust management in its decisions. As far as activism in concerned I will do it if I clearly feel that our rights are not respected. I will choose my battles though as it is time consuming, requires quick moves and lots of intensity.

Remember that in France with have specific tax free envelopes which can explain that they can be some opportunistic movement and more turnover (especially at the PEA PME level where there are fewer quality companies).

No cash as I am full invest: it forces me to always go towards my best ideas and test my convictions.

Smaller weights (under 1%) are new positions and are in the PEA PME envelope. It will be difficult for me to increase their weight but are quality companies.

During 2022, most of the companies in the portfolio will be investigated and maybe one or two non-French but European companies could be included. Nevertheless, the focus will remain on French companies which are either in the portfolio or which seem interesting and who are french hidden champions.

The aim for 2022 will be to work on more regular publishing, keeping the posts short as it forces me to go straight to the point.

I wish you and your loved ones great end of year festivities.

Cheers

Jey Fox