Three AIM stocks we own and two we have avoided

TL;DR

Anna McDonald discusses recent buys and sells in the portfolio, focusing on finding better value stocks and guarding against stock underperformance.

Transcript

welcome to the latest insider interview today i have anna mcdonald manager of the mrt uk smaller companies fund anna thank you very much for coming into the studio thank you for having me what have been the most recent buys and sells in the portfolio we've been selling some of the more highly rated stocks that have done really well during the pande... Read More

Key Insights

• ☠️ The fund has been selling highly rated stocks and looking for better value stocks in the portfolio.
• ❓ Some stocks, like Focusrite and Genus, have been sold due to expensive valuations relative to profits.
• 💪 The fund invests in expensive shares with a focus on growth, but cautious about companies that require strong growth to justify valuations.
• 🥹 AIM stocks are not considered inherently riskier and the fund holds positions in GB Group, Cranswick, and Accesso.
• ❓ Consumer growth stocks are being trimmed due to pressure on households and inflation.
• 🫢 Areas like oil and gas can benefit from higher prices.
• 📈 The fund seeks to invest in companies with growth potential and inexorable trends like digital transformation.

Questions & Answers

Q: What has been the recent focus in the portfolio in terms of buying and selling stocks?

Anna McDonald has been selling highly rated stocks that have performed well during the pandemic. The aim is to find stocks that offer better value in the current market. Stocks that are expensive relative to profits, like Focusrite and Genus, have been sold.

Q: Does the current macroeconomic backdrop affect the way the fund invests and analyzes companies?

The fund is cautious about companies that would have to deliver very strong growth to justify their valuations, considering the uncertain next year or two. However, the overall investment strategy and scope of the fund remain intact, with a balanced portfolio and a focus on growth. The fund has also invested in stocks with protective dividend yields, like oil and gas stocks.

Q: What are the biggest positions in the portfolio within the AIM stocks?

AIM stocks, which account for about 45% of the portfolio, are not considered inherently riskier. Some key AIM stocks in the portfolio include GB Group, Cranswick, and Accesso. These technology companies have good growth opportunities. However, certain AIM stocks with concerns over business models are avoided, such as Boohoo and ASOS.

Q: In which areas of investment are growth a bit risky, and why?

Anna McDonald believes that consumer growth stocks, such as Focusrite, may be affected by households coming under pressure, increased inflation, and energy bills. However, certain areas like oil and gas can still perform well in the face of higher prices. The fund looks for companies with growth potential and inexorable trends, such as digital transformation.

Summary & Key Takeaways

• Anna McDonald has been selling highly rated stocks to find better value stocks in the portfolio, as the market is currently nervous and stocks tend to underperform if not meeting numbers or lacking confidence and potential upgrades.

• Some companies, like Focusrite and Genus, have been sold due to their expensive valuations relative to profits.

• The fund invests in expensive shares with a focus on growth, but Anna does not believe this will fundamentally change the scope and opportunities of the fund.