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) NAV closed FY19 almost flat y-o-y, lagging the broader market recovery over 2019. On the other hand, the rapid sell-off amid the coronavirus lockdown drove Q1 NAV down by 26% by end March, in line with main DAX indices. In FY19, PZS reported an 88% y-o-y lower result on financial instruments and 36% y-o-y lower income from dividends, which led to a net loss for the period of €8c per share. We note that PZS is focused on lesser-known stocks, which may take time to unlock value. A potential NAV kicker may come from its €139m (as at end-March 2020) portfolio of extra compensatory claims (ECS).