Scherzer & Co (PZS) invests its funds mainly in domestic equities. PZS looks for companies that are unknown or unloved, and special situations. The focus is on special situations, where the downside is perceived to be limited. In addition, it acquires value stocks, mainly below book value. These stocks need to demonstrate strong business models.
Scherzer & Co’s (PZS’s) NAV closed H119 flat vs end FY18 and declined 3.5% to the end of August. H119 portfolio performance was dominated by weaker results from GK Software and pre-squeeze-out stagnation in Linde’s share price. These two companies made up c 31% of PZS’s portfolio at the peak in March 2019. €22.8m cash inflow from the Linde squeeze-out allowed for deleveraging and increased PZS’s portfolio of extra compensatory claims (ECS) to €139m. We note that PZS is focused on lesser-known stocks and its short-term performance may at times differ from the broader market.