Investing away from the crowd

One of the newcomers in our European Value Fund in Jan 2024 is the Swiss small-cap Zehnder, a leading player in European radiator and ventilation markets. This family-owned business is shifting its business away from the commoditized radiator business into innovative heating, cooling and air purification solutions, all segments with attractive growth rates. We think the company will become a key beneficiary for the European Green Deal focusing on energy efficiency of buildings is expected to lead to a higher renovation rates in Europe. It not only scores well in our proprietary quality-value framework, but this well-run business is trading at 7.5 times price-to-cashflow, a valuation we find attractive for a business with a ROE of 13.4% and a solid balance sheet.