Anna Macdonald - Fund ManagerAnna Macdonald (previously Croze) is an experienced fund manager specialising in UK equities. Anna began her career as an analyst and fund manager at Henderson Global Investors in London, where she co-managed the core enhanced UK equity product, and the UK Equity Market Neutral hedge fund. At Henderson she was an analyst on the media sector. After some time living in Kenya, as head of research for Old Mutual Asset Management, she returned to the UK and worked at Threadneedle Investors in London before moving to Edinburgh. 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 has been a CFA Charterholder since 2003.
Market Commentary - April 2020 - Amati AIM VCT
Posted by Anna Macdonald on 18/May/2020
The rapid stock market recovery we saw from the middle of March continued into April and became broader based. The Amati AIM VCT rose by 13.8%, lagging the benchmark which increased 17.6%. Year- to-date the VCT has fallen 9.2%, outperforming the benchmark which is down 16.2%.
Much is being made of the new ways we might live, work, shop and play as we emerge from the end of the beginning of this pandemic. As Andrew Jones from commercial property company LondonMetric said, the tectonic plates have shifted and won’t return to where they were. But neither are we sure of how far they will move and where they will settle. As analysts, we attempt to quantify where we think sales and earnings numbers will change over the coming months. Downgrades and profit warnings are endemic across several stocks and sectors, particularly those exposed to the ‘shut down’ areas of the economy, such as retail, leisure and travel stocks. Whilstsome restrictions look set to be lifted, perhaps the only certainty we have is that we must learn to live in a much less predictable world, at least until the virus is better understood, effective treatments can be found, and a vaccine can be successfully developed and globally distributed.
This makes forecasting difficult to an unprecedented extent. It is perhaps why many investors have focussed on the fairly narrow range of companies that are doing well in the current crisis. Many of these are amongst healthcare and technology stocks – where the VCT is well-positioned, with a weighting of over 25% and 23% respectively.
Some companies we hold are more exposed to these ‘new normal’ areas, such as e-commerce retailer Sosandar (up 73%) and LoopUp, the conference call service provider (up 78%). Video-gaming has been incredibly popular during lockdown, with existing gamers playing more and others being drawn into trying it out. This phenomenon seems likely to persist, which has driven up one of our largest holdings, Frontier Developments, by nearly 23%. Keywords Studios has also done well, up 15%.
We have supported two fundraisings in April for the VCT, for new holding Synairgen, and an increased investment in Intelligent Ultrasound. Synairgen raised £14m to fund the trial of their drug which boosts lung immunity, which could help patients with mild to moderate cases of COVID19 recover faster, and therefore reduce the load on the NHS and free up resources for the more severely affected. Intelligent Ultrasound also completed a placing, raising £5.2m, as their business was impacted by COVID19 in both positive and negative ways. Intelli Ultrasound makes ultrasound simulation training products, and new sales have been slowed by the inability to make hospital visits. However, they have been able to upgrade remotely 50 simulators to help train medical staff to scan COVID19 patients’ lungs using ultrasound at the bedside. Therefore, lung scans can be completed without moving the patients around hospitals to CT scanning rooms thereby reducing the risk of infection spreading. The exciting future for Intelligent Ultrasound lies in the development of AI (artificial intelligence) to improve the accuracy and reliability of scans and this fundraise will go towards addressing this substantial global market opportunity.