May saw the end of a busy first quarter reporting season, which continued to propel markets higher and made the European market one of the best performing major equity regions. Similar to April, the majority of company earnings beat the expectations of sell-side analysts, although in many instances perhaps not that of buy-side analysts, as share price moves did not reflect the earnings upgrades implied by many company releases. We continue to believe in our thesis of a second V-shape recovery, following the industrial-led one of the past year – this time led by the consumer. Evidence of this is starting to build as the May services purchasing managers’ index (PMI) business survey improved, exceeding the 55 level. Additionally, we are highly encouraged by the increasing vaccination rates across Europe: the major economies in the region are now vaccinating around 0.8% of the population per day. At long last, the European consumer is set to be unleashed.

We initiated a position in Pandora and added meaningfully to our pre-existing holdings in Adidas and MOWI. We also opened positions in Ahold Delhaize for idiosyncratic, stock specific reasons. We closed a number of positions which helped fund these moves, notably in Novartis, thereby concentrating our health care holdings elsewhere.