European Midcap Top Picks: Rotating into earnings inflections and underappreciated growth

This quarter's European SMID rebalance reflects another meaningful rotation, with four new stocks joining our Top Picks selection and four names leaving the portfolio. We add Andritz, Ambu, Siegfried and Vallourec to the portfolio, replacing Deutz, GTT, Rational and TAG Immobilien. Since our July 2026 review, our equal-weighted list has returned -3.89%, underperforming the MSCI Europe Small benchmark (-4.60 percentage points relative), mainly under pressure from its high exposure to France and to defensives. The new additions increase our exposure to accelerating hydropower investment and the energy transition, structural medtech growth combined with margin inflection, high-quality healthcare outsourcing with underappreciated growth potential, and a cyclical recovery in energy services supported by improving pricing and volumes. The portfolio remains positioned around a combination of structural growth, self-help, margin expansion and valuation re-rating opportunities. Although Societe