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Dear fellow investors,

In this newsletter you will find an analysis of the BDL Rempart Europe and BDL Convictions funds’ performance in 2019, as well as our investment ideas for 2020.

Après la débâcle des marchés en décembre 2018, nous écrivions à nos investisseurs dans notre lettre de janvier 2019 « nous retrouvons des valorisations intéressantes pour déployer notre capital sur des entreprises dont nous apprécions les modèles économiques et l’équipe dirigeante. Nos outils informatiques et quantitatifs qui permettent de les mesurer sont récents mais nous n’avons pas souvenir d’avoir pu constituer depuis la crise de 2008 un portefeuille d’investissements long aux multiples de valorisation aussi attractifs. Le rendement moyen du free cash-flow de nos investissements long est supérieur à 10% ».
Our performance in 2019 were good despite a complicated situation. Global growth showed signs of weakness due, amongst other things, to uncertainty surrounding the trade dispute between the United States and China, to Brexit and to several uprisings such as that in Hong Kong. As in times of crisis, central bankers again came to financial markets’ rescue, kicking any recession into the long grass. Economic agents are being encouraged to accumulate debt, and financial asset prices are at a high. The risk now is that central bankers will end up running out of ammunition. The most common response is that fiscal policies will take over the rescue operation at this point. The argument holds water as central banks’ insatiable appetite for buying government bonds would provide the fiscal headroom needed by increasingly populist governments. The question is whether the policy tempo will be fast enough to identify and anticipate future risks of a recession.

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