Over the third quarter we took the opportunity of depressed market levels to top-up our holdings in several of our core positions for the Fund.
It is rare that such impressive businesses trade on discounts, particularly across multiple sectors, and this is a wonderful time to be putting new money to work. In the Industrials space, we added to our holdings in steam-engineers Spirax-Sarco and maker of niche scientific instruments Judges Scientific and in Materials, we were buyers of Croda, the Yorkshire-based supplier of natural active ingredients to the cosmetics industry. If you have ever splashed out on expensive skin care products, then it is more than likely that this contained Croda’s lanolin.
Within Financials, shares in London Stock Exchange Group and Experian came back into buying range and we duly added to both. This is a classic case of the market incorrectly turning against a whole sector due to macroeconomic concerns, when in fact both LSE and Experian have proven time and again their ability to grow through good times and bad. Experian, after all, make their money by selling data on individuals to the institutions that offer them credit (think banks, health insurance, retailers) – in tricky times these institutions need to be even more diligent than ever to ensure their credit lines are tight.
In order to fund these additions, we sold two positions – Heineken and Genus. We purchased Heineken shares in the depths of COVID on the basis that the brand was bulletproof and that times could only get better. What has changed is that it looks to us like the next generation will on balance drink more spirits and less beer than the baby boomers – one can already see this happening in America with the decline of previous stalwarts like Budweiser and Coors vs booming sales of tequila and rum. This is brilliant news for our investment in Diageo, but not so for Heineken. Meanwhile, we felt that Genus (who sell to pork, beef and dairy farmers globally) were fighting an uphill battle in their key Chinese market against both swine fever and geopolitics that was not going away any time soon.
Regular readers will see our top holdings remain consistent, reflecting the long-term nature of our funds. Of particular note this quarter, RELX (our largest position) continues to surprise us positively and shares are hitting all-time highs. InterContinental Hotels Group have also enjoyed an impressive run, with customers returning and shares having now more than doubled since the first COVID lockdowns. IHG continue to open new hotels and we see plenty more growth to come.
The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article.
Please also note the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.