Legendary investor Warren Buffett is renowned for his sage advice. The great investment guru came to mind a few days ago when I spoke to Richard Penny, a fund manager at Crux Asset Management.
Penny, who has been around the investment block several times with L&G, M&G and Scottish Amicable, has just launched the Crux UK Smaller Companies fund, believing there is a great money-making opportunity for investors on a period of three to five years. .
He said the share of small businesses in the UK stock market now represents a “buying opportunity” – mainly because share prices have fallen sharply in response to the deteriorating economic environment. Too far according to Penny – many companies, he says, are now chronically undervalued despite business models perfectly suited to their purpose.
One Step Ahead: History doesn’t always repeat itself and global geopolitical events could put a damper on everything
Over the past year, the FTSE SmallCap Index has fallen more than 20%. This compares to a 4% drop in the FTSE All-Share and a slight rise in the FTSE100.
Echoing one of Buffett’s famous sayings – “the best chance to deploy capital is when the going gets tough” – Penny is confident he can repeat the kind of returns he has generated for investors when shares of UK small companies rebounded between March 2009 and July. 2011 (post-financial crisis) and March 2020 and January of this year (post-lockdowns). The funds he managed over those two periods – L&G UK Alpha and Crux UK Special Situations – generated returns of 168 and per cent respectively, compared to average returns for UK small business funds of 119 and 113 per cent. hundred.
Of course, history doesn’t always repeat itself and global geopolitical events could put a damper on everything. But Penny might be right when he says the UK stock market has “passed its peak of desperation and pessimism”. As Buffett says, “Be afraid when others are greedy. Be greedy when others are afraid.’
Will fortune favor the brave in Vietnam?
Warren Buffett’s words about deploying capital wisely could also apply to Vietnam, until recently one of the best performing regions in the emerging markets universe.
Despite an economy heading for 8% growth this year thanks to a mix of heavy foreign investment and a growing middle class with money to spend, its stock market has been in reverse.
According to the managers of investment trust VinaCapital – listed on the London Stock Exchange – there are two reasons for the Ho Chi Minh index’s 31% drop this year. First, international investors, taken aback by the global recession, pulled their money out of risky emerging markets like Vietnam. The stock market has also been hit by a regulatory crackdown on wealthy individuals who manipulate stock prices for their own benefit.
Despite an economy heading for 8% growth this year, Vietnam’s stock market has backtracked
On a conference call last week, VinaCapital told me that the Vietnamese stock market needed “time to heal”. Provided there are no more scandals, he thinks the market will move higher as corporate profits rise and the economy stays in growth mode.
Despite losses of 14.1% over the past year, the trust’s five-year returns are still 61%. The manager’s forensic approach to the companies in which he invests is admirable. If the stock market turns the corner, that confidence might do well.
Fortune smiles on the brave – and no, that’s not another of Buffett’s famous quotes. It comes from the Latin proverb: “Fortes fortuna adiuvat”.
believe in miracles
So permacrisis – a prolonged period of instability and insecurity – is the word for 2022, according to the compilers of the Collins Dictionary.
Let’s just hope it’s not on the publisher’s airwaves this time next year.
Hopefully by then inflation will be under control, Putin will be no more, China will be too focused on sorting out its failing economy to think about invading Taiwan – and the magic dust dusted by Rishi Sunak and his fixer Jeremy Hunt in the coming years The budget will have begun to turn the economy around.
To quote the late great Errol Brown of Hot Chocolate: “I believe in miracles”.
We need to get back on track NOW
Traveling by train becomes more of a challenge than a joy. Staff shortages, working to rule and industrial action (one moment, the next) prevent many commuters from getting the service they paid for.
For the past two weeks I’ve sat on a train that ended halfway to its intended destination due to staffing issues, causing widespread dissatisfaction among travelers hoping to get to Manchester rather than elsewhere. to be dropped in Birmingham.
Traveling by train becomes more of a challenge than a joy
I also had to give up on a weekend planned to attend a music concert in South West London as part of the journey involved a replacement bus service. The result? I would not have returned other than by Uber.
On numerous occasions over the past few days, I have turned up at my station to find that the train I intended to take has been canceled or delayed. Frustrating, yes, although so far I haven’t been given the excuse I was given to a dear friend on a business trip from Chichester to London last week: that the His train’s delay was due to the fact that a trampoline was running the line.
We have enough problems to deal with on top of a dysfunctional rail service. Friday’s news that the rail union RMT has suspended strikes planned for this week is a step towards getting our trains running again.
Hats off to Coventry
Hats off to the Coventry Building Society for supporting those in need in its beautiful city. Last week it announced it would provide £1million to help residents struggling to cope with the daunting cost of living crisis. The money, he says, will help ensure local school children won’t go hungry and prevent the city’s elderly from getting cold due to unaffordable energy bills.
Recognizing its national reach, the mutual is also providing £1,000 to each of its 65 branches so they can donate the money to local food banks – stretching from Sheffield in the north to Somerset in the west.
Well done Coventry. More financial services firms should learn from this building society’s book. There is a time for booming profits, but it is not now. It is compassion that is required.