At the start of his talk, Jonas Liegl, Portfolio Manager of Lupus alpha Micro Champions, named four key challenges facing companies in Europe: the energy crisis, fragile supply chains, persistent inflation and demographics. While politicians are responding to these problems with massive investment programmes, the specific solutions required to tackle them can only come from innovative companies that could even emerge from the current crisis as winners. According to Liegl, “politicians don’t develop vaccines for pandemics; only resourceful companies can do that”.
In light of this, Liegl is convinced that although the energy crisis hurts right now, it will ultimately enable us to complete the transition to renewable energy sources much more rapidly than originally anticipated. He believes the re-industrialisation of Europe is the answer to our supply chain disruption, and that the solution to inflation and demographic issues lies in increased automation and digitalisation. Liegl pointed out that there are well-positioned European companies in all these areas, including providers of energy storage systems, gas, hydrogen and electricity infrastructure, manufacturing technologies and local production solutions, as well as providers of solutions that support the automation and digitalisation of production processes.
He adds that, if anything, it is usually smaller companies who can manoeuvre “like speedboats”, recognise trends at an early stage, rapidly push through changes and consistently seize opportunities. So where can these companies be found? In European micro caps, among other places. Liegl concluded by saying that these small companies in Europe offer outstanding characteristics for profiting from the trends emerging amid the crisis. That means it is still worth investing in Europe, if only selectively via an active investment strategy.