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Portfolios Crackling with New Ideas

12th November 2021

We have been incredibly busy with research for the past few weeks. Don’t worry, we are not one of those teams who are constantly talking about how busy we are, how hard we work, and asking everyone to “please feel sorry for us” or admire our dedication!

We do go through fallow periods when new ideas are hard to come by, and in those periods looking after the portfolios is about double-checking all is well with what we do hold. What is truly exciting is that we are currently experiencing a bumper harvest of new ideas. This requires lots of due diligence (DD) and hard work to get comfortable with them. We thought it was worth sharing with you a few of the ideas we are especially excited about.

  • After a period in which we largely stood aside and watched from the side-lines (although we did the required DD) the extraordinary volume of investment trust issuance, we have been excited by two recent soon-to-IPO trusts, where we see merit in potentially joining in at launch. Regular readers of these blogs, and supporters of HFM will know we tend to shun investment trust IPOs. So it has been gratifying to see some brokers / investment managers / Boards actually address the “why bother at IPO” question. You’ll hear more from us on these opportunities shortly.
  • We have recently bought into Weiss Korea Opportunities – a portfolio of Korean preference shares we purchased via an investment trust trading at a discount. The preference shares trade at a deep discount to the ordinary shares (you give up voting rights and they are less liquid) but they offer an attractive yield. There are good reasons to believe the underlying discount of preference shares to ordinary shares will start to narrow. Recent large purchases from those managing the trust are a good sign also.
  • We have uncovered a cracking manager of a small fund that specialises in scouring the under-researched parts of US equities. It is the first purchase of a US equities fund we have made in many years.

These ideas (which don’t represent an exhaustive list) represent many parts of our process. Specifically: investment trust expertise giving access to fantastic asset classes that diversify our portfolios and offer attractive returns, engagement with Boards bearing fruit, nimbleness to react and take advantage of smaller investment trusts in niche areas and finally, discovering the very best active fund manager talent in small open-ended funds that larger funds cannot access without owning too much.

Even as liquid bonds and equities pose problems for investors with their expensive valuations and high correlations, and even as macro investors fret over the transitory-or-not nature of inflation, we are delighted to be able to uncover idiosyncratic cheap assets that contribute to diversified portfolios that should help our Funds meet client objectives (i.e. generating real returns after charges) whatever happens to inflation.

Ben Conway – Head of Fund Management

Ben Conway

This financial promotion is issued by Hawksmoor Fund Managers which is a trading name of Hawksmoor Investment Management (“Hawksmoor”). Hawksmoor is authorised and regulated by the Financial Conduct Authority. Hawksmoor’s registered office is 2nd Floor Stratus House, Emperor Way, Exeter Business Park, Exeter, Devon EX1 3QS. Company Number: 6307442. This document does not constitute an offer or invitation to any person, nor should its content be interpreted as investment or tax advice for which you should consult your financial adviser and/or accountant. The information and opinions it contains have been compiled or arrived at from sources believed to be reliable at the time and are given in good faith, but no representation is made as to their accuracy, completeness or correctness. Any opinion expressed in this document, whether in general or both on the performance of individual securities and in a wider economic context, represents the views of Hawksmoor at the time of preparation and may be subject to change. Past performance is not a guide to future performance. The value of an investment and any income from it can fall as well as rise as a result of market and currency fluctuations. You may not get back the amount you originally invested. HA4641.

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