JPMorgan US Smaller Companies reports a rise of 4.6% in the Company’s net asset value for the first six months of 2015, which compares with a rise of 3.8% in the Russell 2000 Index. The Company’s share price rose 2.0% during the first six months of 2015, lagging the increase in NAV and resulting in a small widening of the discount.
The manager says the overweight position in Freescale Semiconductor was the top contributor to relative performance. The portfolio also benefitted from strong stock selection in the financial services and consumer discretionary sectors. Their exposure to software provider Advent Software (which is subject to a bid from SSC Technologies) and commercial real estate broker Marcus & Millichap proved beneficial. Within the consumer discretionary space, they had good performance from the likes of Papa John’s International and Sequential Brands Group.
In contrast, their relative performance was hindered by both their stock and sector positioning in the health care sector. Health care was the best performing sector in the Russell 2000 over the period but they have no exposure to biotech companies as they don’t meet their investment criteria. Their exposure to IDEXX Laboratories was a negative. IDEXX provides diagnostic testing products and reference lab services to companion animal veterinary practices worldwide. The stock exhibited some weakness due to mis-execution by management around the company’s recent move to all-direct distribution. In addition, their overweight position in the producer durables name Generac, which manufacturers portable and standby generators and mobile light towers, also detracted mainly due to disappointing performance in the company’s residential standby business, which is driven by electricity outages from storm activity.
JUSC : JPMorgan US Smaller ahead in H1