A Dutch B2B media company, an American logistics provider and a Finnish lift manufacturer are just some of the latest holdings that have been added to Evenlode’s second ever fund, after co-managers Peters (pictured) and Chris Elliott scoured the globe for enticing investment opportunities.
The fund, which officially launched on Monday, uses the same investment process as the firm’s £1.5bn UK-focused version of the fund but casts a wider geographical net.
Like the firm’s flagship income fund, the global version will invest across the cap spectrum, featuring both household names and what Peters terms “smaller hidden champions”.
Microsoft, Procter & Gamble and Johnson & Johnson are among the bigger names in the new portfolio, Peters revealed, chosen for their focus on strong free cash flows, sustainable real dividend growth and high returns on capital.
But there are several newcomers that UK investors might be less familiar with.
The first of which is Wolters Kluwer, a Dutch-based diversified media, analytics and digital services company.
Peters said: “The value-adding subscription services provide a steady stream of cash flow, giving a free cash flow yield of over 6%, covering the dividend three times. Such a level of cover gives ample opportunity for dividend increases over time.”
Also added to the portfolio is American third-party logistics player CH Robinson Worldwide, which has a market cap of $11.4bn. The Fortune 500 firm acts as a go-between shippers and carriers of goods, helping truck owners fill their vehicles (and make the most of their asset) and senders transport items from point A to point B.
“Despite operating in a somewhat cyclical industry, C H Robinson has delivered remarkably stable returns on capital over the last 15 years,” Peters explained.
“Its yield of 2.5% is more than twice covered by free cash flow, providing a buffer against any industry downturns.”
Lastly, the duo confirmed they will be investing in escalator and lift manufacturer Kone, which they like for its “very strong balance sheet” and its long-term family ownership structure, which chimes well with Evenlode’s own investment philosophy.
The Finnish firm derives its sales from new buildings looking to install lifts, as well as older structures looking to upgrade and modernise their interiors, particularly in Europe.
It also has an “attractive and growing after-sale services” business and boasts a 3.7% yield that is “well covered by earnings,” added Peters.
The common thread linking the large and small “champions” of the fund’s investable universe is their global nature, “having come to dominate some kind of niche,” he stressed. “Multinational revenues are attractive, diversifying cash flows and insulating from geographically-specific risks.”
