BMC International (Ex USA) February 2026

The strongest contributors to the return for the fund for the month were Open House, Heijmans and Kandenko, as the Japanese reform measures have continued to drive returns. 

Japanese companies typically release new 3-year Medium Term plans, and we were lucky to receive an aggressive new plan from Kyocera corporation, with an upgraded buyback, aggressive profitability improvement and a focus on delivering shareholder returns from focusing on their best, highest quality businesses. 

The weakest contributors to returns for the month were GMO Payment and FlatexDEGIRO while the “AI kills software” narrative has impacted a few of our holdings.

From the inception of the fund we were very careful to ensure we avoided Software companies at risk of disruption from AI, given the advancements that Anthropics Claude has made in disrupting these business models. Currently “pure SaaS” companies have been nearly exited and fund exposure to pure SaaS companies is currently near zero. 

Key market events and trends

On the surface, markets look calm. MSCI World sits near all‑time highs, yet beneath the index level the dispersion is striking. Software stocks are down roughly 20% in 2026, while oil‑service names are up about 30% even before the Iran hostilities intensified at the end of February. The headline index hides a market undergoing significant internal rotation.

 The geopolitical backdrop is equally unrecognisable compared with five years ago, and it continues to evolve in ways that are difficult to anticipate. Current US leadership is in place until 2028, and what follows remains highly uncertain.

 Despite this, market reactions and pricing suggest more rationality than one’s initial reaction to price moves. Investors are actively repricing geopolitical risk, AI‑driven disruption, and structurally higher energy costs.

 It is too early to draw firm conclusions about AI’s long‑term impact on software, but valuations in the sector were elevated, making part of the correction a straightforward normalization. The strength in oil services reflects the need for producers to accelerate exploration and extend the life of existing fields.

 Earnings expectations after 4Q25 results and 2026 guidance provide a positive background. EPS estimates for major indices have been revised up by 1–3% since late January 2026 and earnings growth for 2026 is now in the low teens. Europe stands out positively on upward earnings revisions, supported by rising construction and industrial activity and by policy initiatives aimed at strengthening the region’s competitiveness and defences.

Portfolio Changes in the month 

We added exposure to BAM Group, a Dutch housebuilder which is a very similar situation to our very successful Heijmans investment. 

BAM group has undergone a similar transformation to Heijmans, however has the possibility of adding a major buyback and the resolution of a troubling tunnelling contract should significantly improve sentiment in the stock. 

Finally we purchased a position in Swedish Instalco, after seeing material improvements in the companys balance sheet and profitability and growth. Instalco has had a rough few years, however we see signs of significant improvement ahead. 

The funds positioning 

Overall the fund is positioned in some key themes which are playing out better than we originally anticipated. We continue to be positively surprised by the aggressive profitability improvements at Japanese companies, paired with major buybacks which add considerable torque to the stocks. These trends continue to accelerate. In addition, Poland continues it’s economic miracle with no sign of slowing down. 

Finally our Special Situations basket is performing well, with management teams actively trying to engineer positive outcomes for shareholders. We continue to find many new and interesting opportunities in this basket. 

*MSCI ACWI ex USA NTR USD Index in EUR