Anna Macdonald - Fund ManagerAnna Macdonald (previously Anna Croze) is an experienced fund manager specialising in UK equities. Anna joined the Amati team in 2018 from Adam and Company, where she led research for the PAM-award winning wealth manager. She brings her expertise running the successful AIM-listed portfolio service to Amati as well as a breadth of experience in managing substantial OEICs, private client and charity portfolios. She co-managed the Adam Worldwide Fund and the Stewart Ivory Investment Markets Fund which won three Lipper Awards under her stewardship.
Market Commentary - April 2018
Posted by Anna Macdonald on 17/May/2018
The month started off with an early Easter and, for those of us 'up North', a fresh covering of snow. The economic temperature of the UK was similarly chilly, as GDP numbers showed considerable weakness that could not just be explained by the slowdown caused by the 'Beast from the East' in early March. Headline growth of 0.1% in the quarter was the weakest since the end of 2012 and left annual growth at just 1.2%. The bifurcation of company fortunes only seems more apparent with each earnings announcement. The ‘FAANG’s – Facebook, Apple, Amazon, Netflix and Google – seem to defy the law of large numbers and become ever more successful as they scale further. Companies that fail to innovate, or who are stuck with legacy systems or assets, continue to struggle – from banks to bricks-and-mortar retail chains. The results are seen not just in the differences in growth, but in corporate activity too. April saw the proposed merger of Sainsburys and Asda and the increased bid for Shire Pharmaceuticals by Takeda. Virgin Money has been targeted by Clydesdale. These companies all feel that they need further scale to survive. In the case of the supermarkets – better buying power and reducing the store footprint. Some ‘challenger banks’ are too small or not specialist enough to challenge effectively, and may be stronger in combination. What we are not seeing – and might have expected to at this stage – is the picking up of bombed out ‘value’ stocks such as general retailers. In fact it seems to be more successful companies that are digital facing where we have seen some M&A (note the bid for Zoopla since the month end) – particularly from overseas private equity players awash with cash and attracted by cheaper Sterling assets.
TB Amati UK Smaller Companies Fund
The Smaller Companies fund had a good month, rising 7.31%, outperforming the benchmark by 2.19%. Our technology holdings did well. GB Group, which is a global leader in identity data intelligence, had a very strong set of numbers and rose 25%, as last year’s deal contributed ahead of expectations and new CEO Chris Clark reiterated his confidence in the business. Keywords Studios, a company that services the computer gaming industry, announced another excellent year and two more accretive acquisitions. With a market capitalisation now of over £1bn, we’ve seen some substantial new shareholders attracted to the stock. There was a pleasing recovery in Boohoo, which rose 26% from its lows after reporting good sales and margins at the top of the range. Underperformers included Sanne, the global provider of outsourced corporate and fund administration, which has been de-rated following earnings downgrades due to FX headwinds and share incentivisation costs. The only major portfolio change during the month was an exit from Rightmove.
Amati VCT & VCT 2
Amati VCT returned 5.06% and Amati VCT 2 returned 4.38% against the benchmark which rose 3.56%. Our technology holdings did well. GB Group, which is a global leader in identity data intelligence, had a very strong set of numbers and rose 25%, as last year’s deal contributed ahead of expectations and new CEO Chris Clark reiterated his confidence in the business. Keywords Studios, a company that services the computer gaming industry, announced another excellent year and two more earnings accretive acquisitions. With a market capitalisation now of over £1bn, we’ve seen some substantial new shareholders attracted to the stock. Learning Technologies Group has also continued its strong momentum after announcing good results in March and then its first really significant deal in the US for PeopleFluent, a cloud-based provider of recruitment and talent management software. Underperformers during the month included Accesso, the queuing and ticketing software specialist, on no announcements; appScatter, the app distribution platform, which announced a major acquisition and fundraising; and Solid State, the electronic components manufacturer and distributor, which warned of longer lead times and competitive market conditions in its North American Communications business.