Bellevue Entrepreneur Swiss Small & Mid

Swiss SMID caps as measured by the SPIEX Index increased by +3.5% in the month, outperforming the SMI (+2.8%). Markets rebounded on the back of a ceasefire and initial signs of de-escalation in the Middle East. However, with no agreement yet in place, the conflict has shifted into a more prolonged strategic confrontation, disrupting energy flows and maritime trade. While reduced hostilities have supported sentiment, energy markets remain tight. Central banks in the US and Europe held rates steady, but retain a tightening bias should inflation pressures persist. In the event of an agreement, energy markets would likely normalize, easing inflation pressures. The Eurozone Composite PMI declined to 48.6 in April, marking the first contraction in 11 months. Activity was weighed down by a softer services sector (47.4), while manufacturing remained resilient in expansion territory (52.4). In Switzerland, the procure.ch Manufacturing PMI rose to 54.5 in April (vs. 53.3), beating expectations and marking its strongest level since October 2022. The expansion was broad-based, led by gains in production, order books, and purchasing volumes, signalling solid industrial momentum. From a sector perspective Information Technology (+18.1%), Industrials (+7.6%) and Materials (+5.7%) performed best while Consumer Staples (-10.4%), Communication Services (-0.7%) and Consumer Discretionary (-0.3%) lagged the most.

Against this backdrop, the Fund (B shares, CHF) increased +3.8%, outperforming the benchmark by 28ps.

Main detractors in the month were Montana Aerospace (-20.7%), Lindt (-13.2%) and Sulzer (-7.2%). Montana irritated the market by putting out a very conservative 2027 guidance prompting a 13% downward revision of consensus. Later in the month, the CEO resigned for personal reasons, sending the stock further south. The valuation is very attractive at these levels but needs positive catalysts. Lindt’s share price weakened amid a broader staples sell-off, driven by rising input cost concerns and fears that price increases could further pressure volumes. This comes as expectations for an H2 volume recovery may be pushed out, given exposure to the Middle East and softer consumer sentiment. At Sulzer Q1 orders fell by -8.6% in lc, below consensus, with all segments in negative territory. Flow and Services were negatively impacted by the ME conflict, leading to project postponements in the water business for example. The company confirmed the FY guidance.
Top 3 contributors were Huber+Suhner (+30.4%), Polypeptide (+34.6%) and Inficon (+47.4%). Huber+Suhner continued to ride the AI infrastructure wave, with its Polatis unit emerging as a critical enabler of next-gen optical Data Center architectures. Polypeptide was supported by reports of takeover interest from several top-tier private equity firms including EQT, KKR, and Advent. The board issued a company statement confirming it is reviewing strategic options. Inficon delivered strong Q1 sales growth of 14%, driven by a sharp ramp-up in its Semiconductor business, alongside robust order intake and a book-to-bill ratio well above 1x, underpinning a confident upgrade to full-year guidance. Margin softness appears transitory, tied to temporary footprint reconfiguration costs, leaving core earnings momentum firmly intact.

Through the noise and market rotations we continue to stray truthful to our investment framework of 20 years. We look for companies with attractive business models and moat, strong balance sheets, disciplines capital allocation and wrong price tag. Also, we try not to put all our eggs in the same basket and stay diversified through end-markets, themes, geographies and styles. This month we increased our positions in Kardex and Belimo, reducing Sulzer, Lindt and Aryzta.