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Disruption disappointment for French boutique’s flagship fund

Disruption disappointment for French boutique’s flagship fund

La Financière de l’Echiquier’s Guillaume Dalibot got his digital disruption bets wrong in 2017 but construction sector calls proved positive in his European equity fund.

Speaking to Citywire Selector, Dalibot, who is sole lead on the French firm’s flagship €1.3 billion Aggressor fund, said his plans to capitalise on firms cast aside by disruption didn't pay off.

Dalibot had upped exposure to companies he thought were excessively penalised by digital disruptions, including retailers and advertising agencies.

'WPP turned out to be a value trap and we sold our position because we can't go against the wind,' he said. However, Dalibot said he recovered losses by having strong calls on construction.

French group Eiffage was a top contributor to the fund’s performance over the course of 2017, which grew on the infrastructure side and having big exposure to the French construction market.

A new position in the fund showing promise in terms of corporate governance is French food manufacturer Danone. It recently had a change in chairman as the founding family has taken a step back.

'We think it's a very interesting sign that shareholders' interests could become more aligned with the rest of the company while under the previous chairman, they were almost in opposition. 

'For this reason it trades at a discount to the rest of the sector while at the same time, operational dynamics are showing signs of improvement.'

Driving change

Another company Dalibot highlighted as having a strong management is Volkswagen and the fund benefited from being exposed here in 2017.

‘The head of the VW brand had joined from BMW with a very strong track record. He was in a very difficult situation at the beginning of last year because trade unions put pressure on the management to fire him but he stuck around.

'For us that is a strong sign that he has got support from the board and the main shareholders. These are soft indications but they are huge catalysts in terms of profit improvement.

'We all know that Volkswagen has been mismanaged and its earnings potential is way higher than what it is achieving at the moment,' he added.

A newly-initiated position in the fund from last year, Volkswagen is now the third largest position, at just under 4% of the portfolio.

The best calls made in 2017 were Philipps Lighting, Eiffage and Alstom, according to Dalibot.

‘We liked the change in governance at Alstom and we thought it would be a key player in the consolidation of the sector and it actually has been announced it is merging with Siemens' transport division. 

Manager musical chairs

Earlier this month, Citywire Selector reported that portfolio manager Kevin Guillot left the firm after less than six months in his role.

Guillot was hired as co-lead manager of the group’s flagship Aggressor fund in June 2017. 

It is understood that the company removed him from the fund in November 2017, which leaves Guillaume Dalibot as sole manager on the €1.3 billion fund.

Dalibot himself joined from Alken AM in October 2016, which saw him briefly work alongside contrarian fund manager Damien Lanternier. However, Lanternier stepped down at the start of last year.

The manager changes have not altered the philosophy or strategy of the Agressor fund, according to Dalibot.

Over three years to the end of December 2017, the Echiquier Aggressor fund has returned 23.86% in euro terms, which compares to the Citywire-assigned benchmark, FTSE World Europe TR EUR’s performance of 21.70% over the same timeframe.

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