The best performer in the portfolio was Austrian tolling technology company Kapsch TrafficCom (WBAG:KTCG). That investment has played out largely to thesis, being that the new build part of the business would stop losing so much money thus allowing annuity-like revenues to shine through from the other main segment. The stock is up 51.8% over the course of the year and added 2.6% to overall performance. We’ve been a light seller over the year as the risk/reward equation becomes less lopsided in our favour.
German online lotteries seller Lotto24 (DB:LO24) was the other big winner of 2015/16, rising 51.5% and contributing 2.4% of fund performance as the company adds customers at a rapid rate and steams towards cash ow breakeven. We felt the market was severely discounting future prospects a year ago — and while it’s come around plenty we think there’s more to go.
Newish portfolio addition El.En. (BIT:ELN) rounds out the European leaders, adding 1.7% to performance for the year. The Italian laser company was bought in the early days of calendar 2016 at a price we considered too cheap in light of the company’s strong near term prospects (see June 2016 Quarterly Report). The market has partly come around to our way of thinking, and the stock has risen 41.4% on our average purchase.
Betting exchange Betfair, now Paddy Power Betfair (ISE:PPB), has been one of the Fund’s biggest winners both this year and last. We sold out in the first half of 2015/16, but not before the stock rallied 26.1% above the 30 June 2015 price. Boosted by operating results and a merger with Irish bookie Paddy Power, the stock added 1.2% to our returns this year.
We first bought BHP Billiton offshoot South32 (ASX:S32) early in the financial year at prices similar to today’s. It was doubling the position size in the panicky days of early 2016 at prices below $1 that explains the substantial 1.2% addition to the Fund’s returns. We’ve pared that position back again on the subsequent rally, but it’s still a meaningful investment. We’re happy with the company’s assets and management’s cost focus.
It’s a similar story for auction house Sotheby’s (NYSE:BID) which, despite a generally deteriorating outlook, has risen 21.6% from our average purchase price in January 2016. The stock contributed 0.8% to the Fund’s return.
Other smaller contributions came from Alphabet (NASDAQ:GOOG), Sarine Technologies (SGX:U77), Cable One (NYSE:CABO) and Subsea 7 (OB:SUBC). The latter has had a horror year, with the oil price plumbing multi-decade lows in January. Some opportunistic purchases of it and fellow oil services company Haliburton (NYSE:HAL) helped us recoup losses and more as share prices rebounded alongside the oil price.
Overall, we would describe the year as a frustrating one for the Forager International Shares Fund, not dissimilar to the early years of the Australian Shares Fund. As you can see in the individual results, there has been enough go right for us to have produced good results in a difficult year. Fewer mistakes will allow those returns to come through in future.