March 20, 2020

At a time when the wellbeing of you and your loved ones is the most important thing, it makes perfect sense that you may not have been preoccupied with the progress of your investments. Nevertheless, we can imagine that the news headlines, including reports on significant share price corrections on the stock exchanges, are of concern to you. That is why we would like to briefly inform you about the current situation at Juno.

In February, Juno actively intervened in the portfolios for the first time. We significantly reduced positions that we believed were overly dependent on China and/or the consequences of an outbreak of COVID-19 in Europe or the US. We accelerated this process in the first two weeks of March. We invested part of the proceeds of these sales in companies where we see a very limited, or even a slightly positive economic effect of this pandemic. We also invested in new positions that now became attractively priced. As a result of these sales and purchases, we have seen a change in the weights of positions in the portfolios over a relatively short period of time. Moreover, we currently hold a relatively high proportion of cash (approximately 30% in each of the funds).

Unfortunately, our interventions in the composition of the portfolios could not prevent the two Juno funds now showing a negative return. As of last Friday, these funds both have a performance of -12% for March (for the full year 2020: -18% for the Juno Continuation Fund and -20% for the Juno Selection Fund). The daily swings in share prices are extreme and we can imagine that this will probably continue for some time.

Initially, shares of almost all companies were sold by investors, but increasingly we now see that investors have become more selective. Shares of companies that are clearly less, or not at all affected by a decrease in demand, are cautiously purchased again. We hope that we have been somewhat ahead of the curve in that thought process and that we have already positioned the portfolios well in that respect. We now also have a sizeable 'war chest' of cash, which we will carefully use to purchase shares in companies that we perceive to be priced very attractively.

We are a relatively small team at Juno and therefore vulnerable, should colleagues get ill because of the virus. We began working in three teams last week, with only one team present in our office at a time. Furthermore, over the past 1½ years, we have invested heavily in technology, enabling us to now work safely and efficiently remotely, while maintaining strict data handling procedures. Contact with the companies in which we invest is efficiently carried out through conference- and video calls. In this manner we remain well informed of current developments in these special times.

Although it is intellectually challenging under these circumstances, we continue to try our best to look through this virus-uncertainty and to get the best possible picture of what new world we will find once we put the troubles of the virus behind us. The capacity of the companies in the portfolios to continue to compound earnings, remains high. The demand for their services and products remains strong, they have sufficient cash and they have hardly any debt on their balance sheets. That is a very strong basis to rebuild from, once we leave this crisis behind.
 
We are happy to report that we see only a handful of (small) redemptions from the Selection Fund and even a few subscriptions coming in for the Continuation Fund. Should you have any further questions, we urge you to please call us (+31 (0)70 240 0247) or email us (info@juno-invest.com). We are of course always happy to assist you but most of all, wish you good health for the future.

 
Frans Jurgens                      Lennart Smits                            Rob Deneke
 
 
 

About Juno Investment Partners

Juno Investment Partners was established in 2007 as a fully independent fund manager and has an AIFM license (as referred to in Section 2:65 of the Wft), issued by the Dutch regulator AFM. Juno specializes in the selection of exceptional listed (family owned) companies in Europe. Companies that are able to achieve predictable and stable earnings growth year after year are considered for investment. The selection process focuses on the return on invested capital, a low debt ratio and free cash flows of a highly predictable nature. The analysts/portfolio managers compile a highly concentrated portfolio of approximately fifteen companies that they identify, analyze and visit regularly. Selected companies remain in the portfolio for a longer time period (usually more than five years). All analysts/portfolio managers have themselves invested in the Juno funds.

Juno offers three products: The Juno Selection Fund, which focuses on the selection of smaller and medium-sized listed companies, the Juno Continuation Fund for medium-sized companies and individual asset management using the same investment style, for larger clients through managed segregated accounts.

– The Juno Selection Fund was launched in 2008. This mutual fund invests in distinctive European small and medium-sized companies with an initial market capitalization of €250 million to €4 billion. In recent years, this investment style has resulted in above average investment returns for participants in the Juno Selection Fund. This fund has been hard closed for further (follow on) subscriptions since 2018.

– The same investment strategy is applied in the Juno Continuation Fund, which was launched on February 1, 2020. This fund focuses on unique, medium-sized European companies with a market value between €4 billion and €20 billion at the time of initial purchase. As is the case with the Selection Fund, the Continuation Fund also has a strong preference for investments in businesses that are family owned, or companies in which a family or management itself is also a shareholder.