WAGTX Commentary (Q4 2024)

January 2025

In Q4, the international small-cap market (as measured by the fund’s benchmark: MSCI ACWI ex USA Small Cap Index) largely reversed its Q3 gains, with the bench declining 7.66% (after an 8.90% rally in Q3). The decisive outcome of the US election and risk of resurging inflation were interpreted as clear negatives for international markets, resulting in dollar strength coupled with renewed optimism about the US economy. In addition, there were a number of political developments in Europe leading to questions regarding the political stability and continuity of economic policy in the Eurozone. This impacted international markets, particularly Europe, with stocks in Germany, Sweden, France, and the UK averaging double-digit declines.  

The fund outperformed the benchmark by 3.46%, declining by 4.16% as compared to the benchmark’s decline of 7.66%. Our outperformance was broad by geography, with the largest contributions coming from Australia and Israel, a function of a couple of holdings posting strong returns in an otherwise tough market. The fund’s biggest country weights (UK, Japan, Germany, and India) also outperformed the benchmark. It’s notable that in Germany, which accounted for 15% of the fund’s weight, the fund outperformed significantly, declining 2.6% compared to the German benchmark’s 12% decline.  

The largest contributor to the fund’s performance during Q4 was Next Vision Stabilized Systems (NXSN IT). Nextvision is a market share leader in small cameras/gimbals for drones. The key to their share gain is camera quality, weight, and most importantly, integration and configuration with any drone. Given that this is a nascent industry, the stock has been quite volatile – since reaching their prior peak in May 2024, the stock declined 33% by the end of Q3. In Q4 the stock recovered above the May peak, returning 47%.

The second largest contributor to the fund’s performance during the quarter was Catapult Group International (CAT AU), a long-term holding of the fund and one of the top weights. CAT is the leading sports analytics software provider, used by many of the world’s leading sports clubs to monitor and help improve player performance. The stock returned 36% in Q4. The company is dominant in its market, and has reached a point of scalability beyond which revenue growth disproportionately accrues to the company’s earnings. The company has demonstrated fairly consistent growth, and, in Q4, the market noticed the continued strong performance and re-rated it upwards.

The largest detractor in Q4 was M&A Research Institute (9552 JP), declining 38%. This company is an innovator, disrupting legacy merger and acquisition activity in small businesses in Japan using an automated model. While the company has continued to demonstrate a rapid revenue growth rate of 64%, they communicated an expectation for deceleration of the business in 2025, coupled with margin pressure due to investment required to grow the business. An additional concern is that the M&A industry may become more competitive on the back of potential regulatory changes in the industry. We are monitoring the ongoing changes in the industry to better understand the severity of the disruption. 

For a current list of top 10 holdings and performance charts, please click here.. Performance under one year is annualized. Past performance is not indicative of future performance and current performance may be lower or higher than the data quoted. For the most recent month-end performance data visit www.sevencanyonsadvisors.com. Investment returns and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.

The World Innovators Fund seeks to provide long-term capital growth by investing primarily in domestic and foreign growth companies that we believe are innovators in their respective sectors or industries.

All investing involves risk. Investments in securities of foreign companies involve additional risks, including less liquidity, currency-rate fluctuations, political and economic instability, and differences in financial reporting standards and securities market regulation. Investing in small- and micro-cap funds will be more volatile and loss of principal could be greater than investing in large-cap or more diversified funds.

An investor should consider investment objectives, risks, charges, and expenses carefully before investing. To obtain a prospectus, which contains this and other information, visit www.sevencanyonsadvisors.com or call +1 (833) 722-6966. Read the prospectus carefully before investing.

Seven Canyons Funds are distributed by ALPS Distributors, Inc. (ADI)