Ben Peters, investment director at Evenlode, discusses current market conditions and the recent additions of Burberry and Euromoney:
Global equity markets have had a weak start to the year and the focus has been on the commodities sector, particularly oil. This is not a sector we have any exposure to, that is part of our investment process, but the market volatility has thrown up opportunities in adjacent industries.
For example, we have recent initiated an investment in Burberry, the fashion house. The concern around Burberry is that it has exposure to the Chinese consumer and that is clearly a near term risk. But we think the brand is well loved, has a great heritage, and will be in demand for many years to come so it should see through this period of weakness.
Another recent investment is in Euromoney, the business-to-business media group. Euromoney’s end markets are in commodities and in financials. Again, there is a clear near-term risk there. It has well-loved titles such as Institutional Investor and BCA Research – these will be in demand for many years to come.
Looking through 2016, the tone being struck by companies that have reported so far is one of soft markets and weak economics. We expect this trend to continue as companies report their results into the reporting season that is just about getting underway. But as ever we look for companies that have strong balance sheets and resilient cash flows, which will be able to see through any economic weakness and see through to the many years of investment ahead.