On 3rd February 2021, QuotedData hosted the first of four Round the World webinars. This webinar was focused on Europe and included presentations and Q&As from 4 investment companies’ managers, covering markets across Europe. We would like to thank all of our speakers and attendees for joining us.
Click on the links below to watch the presentations.
- Evert Castelein, Aberdeen Standard European Logistics Income
- George Cooke, Montanaro European Smaller Companies
- Stephen Paice, Baillie Gifford European Growth
- Oleg Biryulyov, JPMorgan Russian Securities
We have compiled a short survey on this event, which we would be grateful if you could complete – click here.
Click here for information on the rest of the series and the links to register.
Answers to the questions from George Cooke-
- How do investment targets come onto your radar screen? Do they tend to be introduced to you by brokers, or do you seek them out?
They are not introduced by brokers because we don’t pay for sell side research and in many cases the companies do not have any brokers covering them when we first find them. Instead we have a range of proprietary screens which help us to weed out the stocks which won’t be of interest to us (e.g. those with high debt, no growth, poor cash flow etc) and then our large team of sector specialists do the hard work of reading through the remaining annual reports etc. Given the analysts are sector experts they sometimes also recognise a new theme or growth driver emerging in their field – this might lead us to search for companies that could be beneficiaries. And constantly talking to companies can lead us to new ideas when for example we find one company talking highly of a particular technology or product.
- Being a smaller companies fund, presumably you do not want to become too large – does this rule out likely capital raises for the trust?
It does not rule them out because at the moment we are well below the size where it would reduce our opportunity set. We also think being somewhat larger would prove beneficial to everyone – the liquidity of the trust would improve (making it easier to trade and attracting new investors) and the fixed costs would be spread over a larger base (reducing the expense ratios) for example. Two of the three other trusts in the European Smaller Companies sector are more than twice our size and some of the open ended funds are many times larger to put this in perspective. We would not raise new capital until the treasury shares are all sold of course and we do not want the trust to become so large that we have to move up the market cap spectrum or turn down opportunities that we currently take advantage of – so it is a balance – but one where at the moment the benefits would in our view significantly outweigh the costs.
- Given your Fy20 performance, and your comment about underperforming when markets are running hot >> do you think you’re likely to now underperform in the near-term?
Very difficult (impossible!) to say because we do not know what the future will bring. We just want people to be aware of which environments tend to be beneficial for our style (“quality growth”) and which we would expect to underperform in. We would usually expect to underperform when markets are very strong and risk appetite high – this could be for example when markets bottom after a big bear market and traders rotate into very cyclical recovery plays, or at the top of a market where very speculative stocks might come into favour. Conversely when things are a bit tougher quality companies tend to shine through. Over the long term we think there is good evidence that quality, growing companies outperform and thus we prefer to spend our time finding them rather than trying to time markets (which we are unable to do and which can go horribly wrong if/when a mistake is made).
- How much of the company’s business in your portfolio have UK trade exposure given Brexit. Also, do you think Europe is in a period where it’s role and momentum has slowed between US and Far East?
Data for this is surprisingly hard to come by as most companies do not disclose country by country sales exposures. However, using Bloomberg data we estimate that around 6% of the direct sales of our companies are to the UK – so we think that’s quite manageable. An impact analysis of Brexit would also need to consider whether companies previously exporting from the UK to mainland Europe are now less competitive than their European competitors of course and this will vary from company to company. Europe is an enormous political and economic bloc – for all its faults it still remains a significant player in the geopolitical and economic landscape and that is very unlikely to change. Frankly we don’t worry about it too much either because all we’re really thinking about is whether the top few % of Europe’s best quality companies are maintaining/improving their quality and still have good growth prospects. If these elements are present and we don’t overpay we should make good returns over the long term as long as the global environment remains anything better than total chaos! Historically the various worries about Europe’s political woes have provided good entry points for investors in our view.
Evert Castelein, Aberdeen Standard European Logistics Income
Evert has been one of the key persons responsible for the launch of ASELI in December 2017. Before this he worked for six years as Fund Manager of the Aberdeen European Balanced Property Fund. Evert joined Aberdeen in 2008 as a senior analyst within the property research and strategy team. Besides research and portfolio analysis, Evert has been responsible for the asset management of a small German and Swedish Fund. Previously, he worked for FGH Bank, a market leader in the financing of Dutch commercial real estate, as a research analyst.
George Cooke, Montanaro European Smaller Companies
George joined Montanaro in July 2010. He is Fund Manager of the Montanaro European Income Fund, the Montanaro European Smaller Companies Fund, and the Montanaro European Smaller Companies Trust PLC. He also has Analyst responsibilities for the healthcare sector. After leaving university, George joined the graduate scheme at Aon Benfield (formerly Aon Re). Having completed this scheme, George became an Analyst within the ReSolutions department where he specialised in assisting with the capital and runoff issues of insurance and reinsurance companies.
Stephen Paice, Baillie Gifford European Growth
Stephen is Head of the European Equity Team and a member of the Global Stewardship Portfolio Construction Group. He joined Baillie Gifford in 2005 and spent time in the US, UK Smaller Companies and Japanese Equities Teams. Stephen graduated BSc in Financial Mathematics in 2005.
Oleg Biryulyov, JPMorgan Russian Securities
Oleg Biryulyov, managing director, is a country specialist and the head of the Emerging Europe, Middle East and Africa Group, with a specialisation in Russia and Eastern Europe, within the Emerging Markets and Asia Pacific (EMAP) Equities team based in London. An employee since 1994, Oleg was previously a portfolio manager for Flemings Urals Regional Venture Fund. Prior to this, he was an investment analyst. Oleg obtained a degree in Economics from Moscow State University, Lomonosov. He is a CFA Charterholder.