Pax Global Opportunities Fund Company Examples
The Pax Global Opportunities Fund (PXGOX) invests in companies that are positioned to benefit from the transition to a more sustainable global economy. The following are examples of companies in the Fund.
Beazley is a large UK insurance leader that specializes in complex risks and new emerging insurance needs. It underwrites risks associated with climate change, provides professional indemnity insurance with a focus on mid-sized companies, and is a leader in the provision of cyber insurance. These areas of specialty mean fewer competitors and better pricing power. Beazley manages a diversified book of business in order to earn attractive returns and grow with capital efficiency. The Information Technology exposure represents 50 percent of premium revenue, with robust growth in cyber insurance, while healthcare is another important business line and focus. Beazley is a highly innovative company, and this approach has allowed the insurer to reduce exposure to risks as they become more commoditized, in turn helping the company navigate insurance pricing cycles, while continuing to grow the business and maintaining high returns on capital. Regionally, more than half of revenues come from the U.S. One of Beazley’s competitive advantages is investment in advanced systems and a skilled staff, which help foster further penetration and high quality client growth.
Headquartered in Japan, Keyence is a large cap company that develops and manufactures sensors, machine vision systems, measuring instruments, barcode readers, laser markers and other factory automation sensor products. This company’s expertise lies in providing customized solutions for production lines. These include complex sensors and automation systems that improve productivity through saving energy and time and increasing output, while reducing defects and waste. Productivity of production lines can be increased as much as 30 percent, which represents valuable cost savings for customers, especially during periods of slower economic growth. This enables premium pricing, including for Keyence’s manufacturing consulting services, and drives high operating margins and consistent free cash flow generation. Newer end market growth areas regionally have been abroad in the U.S. and, especially, in China. Notably, Keyence sales are driven by new products, which also gives the company some buffer from economic cycles versus its peers. Another differentiator is the company’s direct sales model, which builds close customer relationships and provides resilience to price competition — margins are at record levels. Lastly, innovation is a prime focus, with development of core technologies managed internally and a new product content of 30 percent.
Danone is a French global food products company best known for its yogurt, infant formula and water products. The company has employees in more than 60 countries and its products are available in more than 120 countries. A large and important percentage (>50 percent) of Danone’s end markets, and therefore revenues and growth opportunities, are in the emerging markets. Danone sees itself as a key player in the food revolution, with a mission to “bring health through food to as many people as possible.” For a number of years, this high-quality consumer staple company has been on a path to focusing on faster growing markets in fresh dairy, nutrition and water, particularly in emerging markets. The 2016 acquisition of the U.S.’s WhiteWave (brands such as Earthbound Organic, Horizon Organic, Silk, SO Delicious and Alpro) among other decisions, and a new leadership team, create the opportunity for the valuation gap to peers to narrow — rebuilding margins by cost-cutting and improving cash flow generation, increasing profitability and thus driving earnings growth. Danone is also a recognized sustainability leader, making CDP’s Water A-List as a pioneering company with regards to its water practices — with CDP selecting companies that help “build our new sustainable economy that works for both people and planet.”
BD is a large global medical technology company based in the U.S. with strategic focus in four core areas: reducing the spread of infections, advancing global health, enhancing therapy and improving disease management. As the leading provider of products conducive to safer drug delivery and infection control in medical care settings, BD is an active contributor to reducing the spread of antimicrobial resistance and lowering the rate of hospital acquired infections. Having built a strong platform over the last five years, BD develops and manufactures medical devices, diagnostic systems, reagents and bioscience systems. BD typically retains dominant market share in key product categories, a broad and deep portfolio with scale and quality, and leverages these resources for continued research and innovation. Operating in more than 50 countries including emerging markets, the company has a 20-year history of generating consistent growth. Financial characteristics of high return on equity, robust multi-year operating margin expansion and strong free cash flow make BD an attractive defensive holding in the portfolio. Impax expects high leverage levels associated with recent acquisitions to be reduced over time.
* Pax Global Opportunities Fund holdings as of 12/31/18.
Holdings are subject to change.
This information is not a recommendation to buy or sell any security.