Before the bell: primal survival instinct misleads investors

The largest shareholder of Quest For Growth wants out, and BE Semiconductor Industries continues to gain fans.

Markets climbed again yesterday — even before reports emerged that Iran is open to talks. Wall Street advanced about 1%, while the oil price fell 2%. That shouldn’t come as a surprise: historically, armed conflicts and wars rarely derail stock markets in a fundamental way. But humans are imaginative and tend to craft worst-case scenarios in times of crisis. That’s the primal survival instinct kicking in — preparing for the worst. Yet more often than not, outcomes are far less dramatic. And in our modern world, it’s not about defending yourself against a rival tribe or wild predator. Bracing for disaster can actually be counterproductive. Like selling into sharp market drops, while those moments are usually buying opportunities offering long-term upside. As if to prove the point, previously beaten-down stocks like bpost (+8%), Syensqo (+5.6%), and Umicore (+4.1%) took the spotlight. Exmar (-4.2%) dropped after news that the main shareholder plans to strip more cash from the company through elevated dividend payouts.

Japan’s indices are trading slightly higher this morning, while Hong Kong is down by about 0.5%. We’re still waiting for earnings season in July, but Colruyt reports full-year results this evening for the fiscal year ending March. Will we hear news about a sale of the French operations?

Largest shareholder wants out of Quest for Growth

Belfius Insurance announced its intention to sell its 12% stake in Quest for Growth. The bank likely still owns the shares from the fund’s partially failed IPO. Quest is the only listed investment fund in Belgium with the special PRIVAK status, which requires it to invest a portion in unlisted companies and funds. More importantly, it is obligated to distribute 90% of its profit as dividend. That has led to extreme volatility — from very high dividends one year to none the next, depending on market conditions. In the past, costs were also too high. That’s no longer the case, but Quest never managed to shake off the stigma. As a result, the fund trades at a 45% discount. Its portfolio, however, looks attractive: 60% is invested in technology and small caps like EVS, Jensen, Virbac (animal pharmaceuticals), and Arcadis (engineering consultancy). If the share drops sharply, it could be a buying opportunity.

For Besi, more packaging means more selling

BE Semiconductor Industries, or Besi, has been on a strong rebound with the rest of the chip sector in recent weeks. It still trades about 25% below its peak from mid-last year. Besi produces machines used to package chips. Investor interest is growing as more chip components are being integrated into final applications for enhanced performance. This trend — known as hybrid bonding — boosts demand for Besi’s specialized packaging machines, as chips must be interconnected during packaging. The company recently raised its guidance for the coming years. Yesterday, Deutsche Bank upgraded the stock to a buy rating.

Did you know…

that Luxury group Kering jumped 11.8% yesterday after it announced that Luca de Meo will become its new CEO, ending his successful tenure at Renault (-8.9%)? Kering, however, is still trading nearly 80% below its peak during its glory years.