Fund performance in August came to –3.79% (vs. –3.10% for the benchmark index).

The market remains skittish with regard to small caps for two reasons: 1) a macroeconomic slowdown that has been visible for several months, with talk of a soft landing; 2) rate hikes that seem unstoppable, even though inflation has already significantly subsided.

In light of H1 earnings and given that comparison bases are expected to be simpler in H2, we believe that recent market corrections are sometimes excessive.

With H1 organic growth of +10%, FREELANCE provides a good example. While we have grown accustomed to much stronger performances from the company (+59% in 2022, with organic growth of +19%), the latest figures are perfectly acceptable. This is especially true given the deteriorated economic context and the one-off effects of the interest rate shock. The slowdown has been punished by markets, with FREELANCE down –40% YTD. At present the company’s shares are trading at 7.5x EBIT 2024 and 1.3x equity (ROE of 15%).

On the portfolio level, we have made small additions to positions in CLASQUIN, MERSEN and SES-IMAGOTAG.

The fund is fully invested. We believe that current valuations already price in the deteriorated macroeconomic conditions, and that effects from the rate shock cannot be repeated.