Iván Martín (Magallanes Value Investors) It has been touched by the coronavirus, with its funds in negative and below the benchmarks, but not sunk. In fact, in its last quarterly letter to investors, it has launched a market order ensuring that the revaluation potentials of the three funds it manages remain high, greater than 100%, which would imply a 15% annualized return over the next five years.
In the previous months, when the Covid-19 pandemic has most strongly attacked companies by catching them on foot, however, none of the more than 100 companies invested by Magellan has had to avail itself of any scheme of protection against creditors or file for bankruptcy directly. In the Iberian portfolio, despite the scramble of values like Meliá Hotels or Ibersol, Martín does not foresee irrecoverable capital losses.
His "constant analysis of the financial health of companies" has been "essential" in this regard, considers the manager. Therefore, the potential of its funds would be 10% annualized over the next seven years or 24% in the next three.
Since the March lows, the Magellan portfolios They have bounced around 30%. Martín is optimistic with the real activity data that is being published, such as retail sales, confidence indicators and manufacturing activity, car sales in China or steel and copper prices, among others, that “are performing better than expected, some data even give recovery symptoms ”. In addition, it welcomes the existence of an enormous amount of liquidity in the market, as a consequence of the expansive policies of the central banks, which "would not otherwise have occurred had it not been for the coronavirus pandemic."
Thus, its funds still reflect a "Too negative scenario that does not correspond to reality of the vast majority of businesses "that make up the portfolios. In the year, they lose between 26% and 20%, according to Morningstar.
In Spain and Portugal, Magallanes has increased its position in names such as Inditex, Applus, FCC or Gestamp, among others, which combine "valuation and financial strength". In Europe, it has invested more during the pandemic in ArcelorMittal, Porsche, Moller-Maersk or Massimo Zanetti, among other listed companies. On the contrary, it has reduced weight in Carrefour, Euronav or Siemens Gamesa after having run enough during the crisis. However, regarding the latter, the manager reminds that his conviction, despite having reduced his exposure, “remains maximum”.
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