Monks Investment Trust (MNKS) announced its annual results for the year end 30 April 2024. The company delivered a NAV total return of 17.6%. The share price total return was +19.1%, inline with the benchmark return of +19.1%. The manager noted that the second half of the year provided much stronger returns than the first half, with a NAV total return of +21.6% and a share price total return of +28.5% compared to +16.6% from the index. This is an encouraging return to positive relative performance after the last two years’ declines.
The manager noted that it has been actively repositioning the company’s portfolio, identifying growth equities with the characteristics to perform well even in the more challenging economic environment. The essential thesis of the original investment approach is unchanged, but the experience gained in the last few years has refined its application, particularly focusing on valuation discipline.
The manager added that across the portfolio, companies are successfully fine-tuning operations to adjust to present conditions, while continuing to invest for the future. This has translated into strong delivered and forecast earnings growth. Pleasingly, it continues, there are encouraging signs that investment markets – against a backdrop of stabilising inflation and interest rates – are more willing to recognise this, and relative performance has begun to rebound strongly.
Commenting on the performance and the outlook, manager Spencer Adair added:
“The majority of the portfolio holdings are adapting and executing well. Several holdings have proven their adaptability by exerting exceptional pricing power and have been the strongest positive contributors to portfolio return. Martin Marietta (aggregates and building supplies) is a case in point. It has been able to increase aggregate pricing significantly (+14% year-on-year†) and deliver record levels of profitability. It has been a similar story at CRH (cement and building supplies), which was the second-largest contributor to portfolio return. Elsewhere, Meta (social media) as one of our ‘Stalwart’ growth holdings, has unleashed the power of its advertising estate by leveraging its growing AI capabilities to improve its utility to merchants. This has driven demand for its advertising capacity and gradually improved pricing. In conjunction with sensible cost control and more disciplined growth spending, Meta has delivered a doubling of net income (+117%) year-over-year.”
“As we look forward, what is most exciting is that the rate of change and technological development is accelerating and underpins a growing, and often underappreciated, opportunity set. By virtue of our willingness to take a wide-angled view of growth (defined by our growth profiles – Stalwart, Rapid and Cyclical growth), we have the latitude to invest beyond the obvious. This allows us to harness the growth potential of lesser-known but nevertheless exceptional growth companies. We are therefore enthusiastic about the potential of SiteOne Landscape Supply and its ability to consolidate the wholesale landscaping supply market in the US, while concurrently embracing the latest advancements in semiconductor design by owning positions in the likes of NVIDIA and ASM International. Our portfolio reflects an eclectic and growing opportunity set and we are confident that it will deliver for shareholders in the years ahead.”
MNKS : Optimism growing as Monks delivers strong gains