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During January, the equity leg developed particularly well, with strong optimism overall in the stock market. This lifted the performance of the fund, which closed January at +3.8% for the month. The stock market in general also performed strongly, especially the large-cap index. It bears repeating that given Exelity's structure with bridge loans and guarantees, there is no relevant benchmark that matches Exelity's unique profile, where the fund aims to deliver at least 10% net return per year - which has been beaten by a wide margin in the last two years (2024: +26%, 2023: +27%). Since the undersigned took over the fund in the fall of 2023, Exelity is +50.2%.
As of the end of January, the fund is overweighted in equities, which make up approximately 70% of the fund, with the remaining 30% in bridge loans and guarantees. We expect the loan exposure to rise somewhat in the near future following the Nanexa transaction that was made in January. In addition to Nanexa, where we took both a directed issue and the loan, January was a busy month with many transactions. A selection of transactions Exelity participated in was Smart Eye, where Exelity participated in a block transaction of SEK 46 per share. In addition, Exelity participated in the directed issue in Glycorex, and supported iZafe in its issue.
On the guarantee side, Exelity was involved in guaranteeing the entire guarantee volume in the Stenocare rights issue, and was involved in the Freemelt guarantee. Exelity also had several outcomes during January where Exelity came clean with its guarantee commitments (0% outcome) in SyntheticMR, SciBase and AcuCort. We continue to view the transaction pipeline going forward positively, which creates a good cushion on the downside. Already signed agreements correspond to approximately 2.5% at NAV in future estimated revenues in 2025. We expect to increase this figure further in the coming months.
Within the equity leg, holdings such as BTS Group, FreeTrailer and Zinzino performed strongly, while Smart Eye had a tough month. Until recently, Exelity has had a manageable position in Smart Eye, which was increased to a similar volume as Exelity had this summer in January via a block transaction of SEK 46 per share. We see a positive risk/reward ahead of the report due on February 18. Smart Eye represents approximately 7% of Exelity as of the end of January, with the fund's largest holding being FreeTrailer with approximately 8% of NAV.
Volatility remains low, around 4%, with a Sharpe ratio around 3.70. This with only one negative return month since 2023 (August -1.0%), and as many since I took over the fund in the fall of 2023.
I would also like to draw attention to the fact that the undersigned was featured and interviewed in FinVoices – an episode that can be found on Spotify under the name “Marlon Värnik: Who is the manager behind Exelity?” I talk a lot about Exelity and how we distinguish ourselves from other fund managers in our analysis and research, recommended.
Now let's go!
With kind regards,
Marlon Varnik