GHP out and Enea in
A bid was placed this month for GHP International, one of the smaller holdings in the portfolio. We sold the shares almost at the bid level, and instead Enea was added.
Enea provides software to the telecom industry, and has a history of successful acquisitions and adapting to changing technologies. We believe that the underlying drivers of Enea are stronger than the market has priced in, including its large exposure to cybersecurity, and it has lost out from economies being shut down.
Alligo completed a spin-off of Momentum Group towards the end of the month. It already looks like the split has been value-creating, as the two companies are separately valued at more than they were as a unit in recent months. We believe that Alligo has a margin journey ahead of it, with synergies becoming apparent through an increased EBIT margin in the coming years, before distributing money and possibly making selective acquisitions. At present, Alligo is valued lower than construction companies, despite twice the margin and the fact that operating profit will grow faster in the coming years.
Momentum Group comes to the stock market with an aggressive acquisition agenda, and without any limiting debt. We believe that Momentum Group will continue to find acquisitions that create synergies in the niche of industrial services, something that will quickly make the company bigger and attract more attention.