If you missed our 23 July webinar with Guy Anderson of Mercantile (MRC) investment trust sponsored by JPMorgan Asset Management on ‘The Search for Great British Companies in the Covid Crisis’, don’t worry!
Here is a 72-minute recording of his presentation, the debate with Canaccord Genuity analyst Kamal Warraich and a half-hour Q&A with investors, all chaired by Citywire editors Gavin Lumsden and Daniel Grote.
Mercantile is a £1.5bn investment trust investing in medium-sized ‘mid-cap’ stocks in the FTSE 250 index just below the FTSE 100. In the programme Anderson (below) acknowledges the difficulties facing the UK economy and stock market, but explains how the crisis has created the chance for him and his colleagues to carefully pick the companies they believe will pull through and prosper.
In short, he says the economic outlook is gloomy but company shares are cheap. Although the path to recovery will be uneven, the ground is set for the middle part of the UK stock market to return to its winning ways. He explains this is why the trust has recently increased its level of ‘gearing’, or borrowing, to maximise its exposure to the companies in which it invests.
Anderson is candid about the challenge and opportunity, saying: ‘We’ve had what you would call the easy part of the rebound – from here it will be a grind but hopefully in the right direction otherwise we wouldn’t be 10% geared.’
What you will see
From top left: Guy Anderson, Gavin Lumsden, Kamal Warraich and Daniel Grote
Here is a timeline of the programme:
Introduction by Citywire’s Gavin Lumsden
(2.50:) Guy Anderson’s presentation
- Mercantile ‘home of tomorrow’s UK market leaders’
- What Mercantile does and why mid caps are exciting.
- Examples of growth opportunity stocks: WH Smith, Softcat & Countryside Properties.
- Stocks added or aided by the trust in the crisis: National Express, Team17, Balfour Beatty, B&M European Retail, Londonmetric Property & Beazley.
(26.00:) Panel discussion
- Valuations are attractive but could the UK be a value trap?
- Asset allocation: how much should investors have in the UK and other markets?
- Are UK tech companies a bright light or part of a speculative global bubble?
- How has Mercantile used gearing? What does it say about the managers’ bullishness or caution?
(37.50:) Q&A – your questions answered
- How long will it take Mercantile investors to recover their losses from this year?
- How do you see the FTSE 100 performing with Covid and Brexit over the next six months?
- Are there any British companies that can survive and provide income?
- What is Mercantile’s dividend policy and how is the board managing it during the crisis?
- What is the real rate of dividend growth Mercantile has achieved after inflation?
- How diversified is the portfolio?
- What is the annual level of stock turnover in the portfolio?
- What is your active share (difference from the FTSE 250 index)?
- Stock concentration – how much do you typically hold in individual stocks?
- When do you decide to sell?
- Do you have to sell a stock if it’s promoted to the FTSE 100?
- Re: Countrwide – what are the prospects for property prices?
- How will National Express cope with social distancing on its buses and coaches?
- How positive are you on Londonmetric and logistics?
- Given the US is looking decidedly sickly in the run-up to the presidential election, what risk does that pose to the UK?
- Why is the UK economy recovering more slowly than other countries?
- Do you and your colleagues invest in the trust yourselves?
- Does the trust have a discount control policy?
(1.09.44:) Closing comments