One example he cites is Ryanair, a low-budget airline based in Ireland. He notes the company’s low costs and strong balance sheet helped it gain coveted slots at airports that other airlines had to give up during the global lockdown. The airline is “emerging from Covid in a much better position than many of its peers that still rely on government support,” Ling says.
Benzinho highlights positive structural growth trends around industrial companies, as well as the transition of society in general from fossil fuels to more environmentally friendly energy. The fund, which is overweight in the industrials sector, includes Schneider Electric and Legrand, two French companies in the electrical equipment space.
“And we own some construction names such as Sika and Akzo Nobel and Hitachi,” he adds. “And we own industrial gases companies. These and others will benefit from investments needed in the energy transition.”
He and Ling are also invested in the digital manufacturing wave they believe is the next step in the evolution of the digital economy. That includes Dassault Systèmes, a French software company that serves companies in the aerospace, automobile and chemical industries. “Its software does everything from designing products to a product’s life cycle management. That business has been growing about 10% organically, and it’s sustainable for the long term at good margins and returns,” Benzinho says.
He also points to Capgemini, a French information technology services company. “It’s a bit like Accenture, but smaller in scale. It made a recent acquisition in a company that’s focused on operational IT services mostly for manufacturing companies to help them implement digital systems into their manufacturing processes. We feel that IT services as a whole is a great space to be in. That also includes TCS [Tata Consultancy Services, an Indian IT company].”
Ling posits that his fund may not appeal to those investors chasing short-term macro calls. “What we do might sound old school and old-fashioned, but we believe that long-term compounding of returns of quality companies is the right way to go,” he says.