 | David Moss is responsible for managing the Irish Equity Fund and is a Director in the European Equities team. David joined the Group in 1996 and worked as a Fixed Interest Analyst focusing on the UK Gilt and Non-Gilt Markets. From 1998-1999 he focused on UK Equity and since 1999 he has been a portfolio manager focusing on Pan European equities. David began his career in 1987 at Barclays Bank, where he worked as an Analyst on the Corporate Lending Team, working primarily with recovery situations for small to medium-sized enterprises. David graduated from the University of Loughborough in 1996 with a BSc Economics. He has obtained his ACIB and IIMR qualifications and is a member of the CFA Society of the UK. |
Irish Equity Commentary
The Irish Equity market fell sharply over the month posting a loss in Euro terms of -7.25%. The major influence on the mood of markets over the period was the stream of broadly negative macroeconomic data being reported, particularly relating to the US economy. Interestingly, the data emerging from Europe and Germany in particular was more positive. Over the course of the year, we have seen sentiment swing between optimism based on overall good corporate newsflow and concern that a double-dip recession is around the corner. We have and will continue to focus primarily on the long term valuations of the underlying companies and the potential for generating healthy returns looking forward.
On these points we have grounds for optimism. First, the valuation of our preferred holdings, businesses such as Kerry Group for example remain attractive on an intrinsic basis. A second point, which is arguably being overlooked in the short term is the return of M&A activity; we believe that this will continue to be a feature of the business environment over the coming years. We believe that in an environment of challenging growth, larger companies with strong balance sheets will exploit generally low prices and an absence of competition (most notably private equity) in order to build scale in their niche. Whilst we would never hold a stock purely for corporate activity, we would see an increase in deals across th market offering some support for prices and for the market itself.
Over the month, the fund returned -7.4%, broadly in line with the market. The main negative contributor was our low weighting to the oil exploration and production companies which were buoyed by generally good news (and in fact some corporate activity) in the sector. Clearly the prospects for these companies is less predictable than the businesses that we prefer to hold and are just as prone to materially negative as well as positive surprises. We rather look for a better equation between risk and reward. (31/09/2010)