Nicolas Walewski is a contrarian investor who does not invest according to momentum trends and does not follow the crowd for his fund Alken European Opportunities. He is an opportunistic investor with an outstanding record of outperformance who is not afraid to close his fund to protects his investors. These qualities make him Morningstar’s European Fund Manager of the Year for European Equity.
“Walewski is a fine example of stewardship,” says Morningstar analyst Thomas. “This is evidenced by his decision to close Alken European Opportunities to new subscriptions in order to protect the returns of existing investors. This means he is refusing money and additional fees in the interests of current investors. He closed the fund in 2007 and again in 2013.”
Walewski was named European Fund Manager of Year for European Equity at a special ceremony Thursday evening as part of the Morningstar Investment Conference Europe in Amsterdam. Other nominees included Tim Stevenson, manager of the Henderson Horizon Pan European Equity and Henderson Euro Trust (HNE) and Isabel Levy manager of Métropole Sélection.
Nicolas Walewski has 20 years of investment experience. He began his career in 1993 at Crédit Lyonnais, moving on to work as manager at Bank Syz where he produced excellent results as head of the Oyster European Opportunities Fund. Walewski founded Alken Asset Management in December 2005 and has surrounded himself with a strong team in terms of experience and qualifications. Over five years to the end February 2014 Alken European Opportunities has widely outperformed its competitors.
Lancereau added: “We appreciate that Walewski, like most members of the team, invests himself in his fund. This is a good way to show engagement with investors.”
Opportunistic
Walewski’s investment style is largely opportunistic.
“He is interested in businesses where all or certain assets are undervalued by the market, forgotten stocks, or companies with sources of profit growth that have not been discovered. Whatever the investment thesis may be, the manager prefers businesses where he believes the management is credible and capable of realizing the company’s high profitability potential”, explains Lancereau.
“The fund follows an opportunistic style that allows him to invest in his strongest convictions without being constrained by an index, style bias or market capitalization. Alken European Opportunities is a good option for investors with a taste for risk.”
Walewski tries to avoid market excesses and may indeed appear to be contrarian in his investment choices. He did not play the commodity and emerging-markets supercycle, for instance.
“Walewski’s strength of conviction is impressive”, says Lancereau. “The fact that he did not invest in emerging markets- and commodities-related European stocks highlights his style of investing. He is not a momentum investor and is not following the crowd.”
His caution with emerging markets – too independent on investment growth – paid off in 2013. Walewski had instead invested in Sberbank and Gazprom and remains sanguine about the fundamentals of these Russian companies and keeps them in the fund portfolio even through the crisis in Ukraine and the sagging performance of Russian equities. “The performance of Alken European Opportunities has not suffered excessively in the first two months of 2014, illustrating Walweski’s ability in portfolio construction”, stresses Lancereau.
Weakness
Analyst Lancereau can only think of one weakness to Walewski’s fund, the performance fee.
“Performance fees are calculated quarterly and there is no high-water mark. This is not in the interest of long-term investors and is even more regrettable as Alken usually demonstrates a favourable attitude to investors, such as the aforementioned closing of the fund. Nevertheless, our opinion of Walewski and Alken European Opportunities remains high.”
The fund has a Morningstar Analyst Rating of Silver. That means it is a fund with notable advantages across several, but perhaps not all of the five pillars of the Morningstar Analyst Rating (People, Parent, Process, Performance and Price) that give the analysts a high level of conviction.
Morningstar Fund Manager Awards
The winners of the prestigious, qualitative Morningstar Fund Manager of the Year Awards are nominated and selected by Morningstar’s 30+ strong team of qualitative fund analysts across Europe. Only managers whom our analysts rate highly - meaning we have recognised the funds they run as Morningstar Medallists with a Gold, Silver, or Bronze Morningstar Analyst Rating - are eligible for nomination. To be a Morningstar Medallist, funds are put through a rigorous evaluation using our five-pillars methodology. The analysts weigh the quality of management, the strength of the process used to run the fund, the quality of the parent organisation - including how it treats investors in its funds - performance, and costs.
Nominated managers should have had strong performance in 2013, but, most importantly, they should have also shown an ability to serve investors well over the long term.
Only three of these awards are given for all of Europe each year: European Equity Fund Manager of the Year, European Global Equity Fund Manager of the Year and European Fixed-Income Fund Manager of the Year.
