Original Broadcast: The Financial Outlook for Personal Investors
Liam O'Byrne of Edison looks at Greggs, the leading on-the-go food retailer, which has a £1.75bn market cap. Their full-year results showed operating profits dimming a little although like-for-like sales and market share were up, despite a gently-declining market. The company expands in such an efficient way that it is reasonable to be optimistic about the company's future. Edinburgh Worldwide Investment Trust, managed by Baillie Gifford, specialises in businesses that have significant disruptive potential at the frontier of technological innovation. Space X accounts for 16.6% of assets. Facing prolonged activist pressure, they've announced a tender offer which Liam explains. It is an example, though, of a broader issue facing investment trusts sitting at a discount. But it does at least encourage boards to be more responsive to the interests of shareholders.
Guests: Liam O'Byrne
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Original Broadcast: The Financial Outlook for Personal Investors
Russ Mould says that investors can't ignore what is happening in the Gulf, which has seen a jump in volatility and sharp declines in some of the investments that been doing best but which had little downside protection. Despite this, the broader US market is roughly where it was a week before. Oil is up by a fifth, but that is still much less than during other Middle Eastern crises. For investors, though, the important thing is not to panic. If you had good reasons for your investments before, then be patient, seek diversification and value and avoid leveraged situations. Energy stocks like BP and Shell account for 10% of the FTSE by market cap and the market is saying the oil price is about right. Oil service companies could be worth a thought if the conflict lasts longer than expected but the only one the UK has left now is Hunting.
Guests: Russ Mould
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Original Broadcast: The Financial Outlook for Personal Investors
Finlay Mathers of Edison says that BP is going through a strategic reset. Its full year results show a strong underlying performance. There's a big divestment programme under way. Buybacks have been suspended to strengthen the balance sheet while Capex has been trimmed as the company refocusses on what it does best. Wheaton Precious Metals is a $70 billion company and yet it only has 44 employees. It's the world's largest precious metals streaming company. It doesn't mine anything but finances mining companies up front in return for a share of the revenue. Their margins have exploded as precious metals prices have risen. They have signed a new deal with BHP which is the single most valuable streaming transaction ever. They are the highest-growth name in the streaming space.
Guests: Finlay Mathers
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Original Broadcast: The Financial Outlook for Personal Investors
Russ Mould of A J Bell says that AI interest has switched from looking for winners to searching for potential losers. But it's been indiscriminate and has included quality software services and data analytic companies. They have a walled garden of data, sticky customers, high margins, predictable cash flows and consistent dividend growth. In fact, their share prices peaked last year, probably because they were on very high ratings compared to the market and thus had a small margin of safety. The question now is, when are the doubts priced in? What multiple would you be prepared to pay, given that the market is on a 13.5 PE and that they mostly have proprietary data which can't be scraped by AI?
Guests: Russ Mould
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Original Broadcast: The Financial Outlook for Personal Investors
Liam O'Byrne of Edison Group highlights HG Capital Trust, a £2bn private equity investment trust in the FTSE 250 which specialises in unquoted software companies in Europe and North America. It was recently hit by the widespread worries about AI's effect on software businesses but in fact most SMEs don't have the ability or confidence to develop their own in-house software and, as a result, HGT's shares have recovered somewhat. However, they are still at a 17% discount to NAV whereas normally there's little or no discount. With AI complicating things so much, it makes sense to get exposure to the sector through good fund managers. Patria Private Equity Trust is an £850m investment trust which concentrates on lower and mid-market companies and is at a 28% discount to NAV. It anticipates a strong rebound in 2026 with many investments ripe for realisation. It aims to exit half of its top 10 holdings this year.
Guests: Liam O'Byrne
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Original Broadcast: The Financial Outlook for Personal Investors
Russ Mould of A J Bell discusses the precious metals meltdown and the ongoing volatility, with silver diving from $122 to $72. He reminds us, though, that both gold and silver are still up 9-10% in a month. Russ runs through the things that might have caused the collapse, including Trump's appointment to the Fed chair, that things had gone too far too fast, that leveraged positions were flushed out and the changes in Comex's margin requirements. But what has changed apart from the price? Nothing, really, so bears and bulls of precious metals are still likely to feel as they did before the past week. It's notable that miners have been nowhere near as volatile as the metals and we are about to see results from some of the majors. Will this be an opportunity? How indeed do you value gold and silver? Russ compares them to other commodities.
Guests: Russ Mould
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Original Broadcast: The Financial Outlook for Personal Investors
Liam O'Byrne of Edison Group says that leading London estate agency Foxtons are at the crossroads of an exciting new chapter. They have set a much more optimistic growth target and are expanding beyond the London area, which could be the precursor to a wider rollout. They have a very rich historical database which is being leveraged with AI to outpace the opposition. He also highlights Baillie Gifford US Growth Trust which tries to identify exceptional businesses, both private and public. They were an early backer of SpaceX which is heading for a potentially record-breaking IPO later this year, yet they're at a discount to net asset value. They focus on disruptive companies which are hard to value but have significant potential upside.
Guests: Liam O'Byrne
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Original Broadcast: The Financial Outlook for Personal Investors
Russ Mould of A J Bell asks what lessons we can draw from Donald Trump’s speech at Davos, an event Russ would normally ignore. We know Trump likes to deal and to keep the US stock market happy and running hot. We can probably expect market volatility and there are indications that it makes sense not being too over-exposed to US equities. Investors keen to protect themselves should opt for shares that aren’t so highly-priced, which applies to lots of UK stocks. American shares are now such a high proportion of the world stock market that it makes sense to diversify away. The FTSE All-World ex-US index has broken out to a new all-time high. Once you go above a previous peak, momentum can be very strong. The UK has had 3 or 4 bids already this year including one for a FTSE100 company. You can still make a valuation case for the UK.
Guests: Russ Mould
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Original Broadcast: The Financial Outlook for Personal Investors
Neil Shah of Edison Group says that Greggs' shares are off almost 40% over the past couple of years. Like other fast food companies, weight loss jabs are having an effect on their business. But the recent Q4 update confirmed that the company will meet their profit expectations and the management team has a great track record of executing growth. Although they could simply farm their estate, further growth is worth pursuing and the price fall gives investors an entry opportunity. BP was the second best-performing oil major last year and now has a clear strategy of returning to its roots which appears to be bearing fruit. The numbers are encouraging and it should make new ground this year.
Guests: Neil Shah
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Original Broadcast: The Financial Outlook for Personal Investors
Musing on President Trump's interest in Venezuela, Russ Mould of A J Bell believes that second-guessing geopolitics is brutally difficult, although he can see why defence stocks are back in vogue. While Venezuela's oil has been much discussed, the United States doesn't really need more oil, thanks to shale. However, China does, which might make the country seem more interesting to Trump. However, there are plenty of other commodities there too. In the markets, gold, silver and now copper are at new highs. The latter has plenty of practical applications, including being needed for EVs. But it takes 10 years to bring a mine onstream. It's interesting that the commodity indices have remained so depressed despite these gains, but the indices are weighed down heavily by oil and gas. If markets are right to expect decent economic growth, then it's not a bad environment for commodities and cyclicals.
Guests: Russ Mould
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