How stock picker bucked trend as interest rates rose

TL;DR

Stuart Wion, Manager of the Adisan Investment Trust, discusses how the focus on valuation, avoidance of overvalued companies, and investments in companies with self-improvement potential have contributed to outperforming peers in the past years.

Transcript

hello and welcome to our latest Insider interview today in the studio I have with me Stuart wion for manager of the adisan Investment Trust Stuart thanks for coming in today thank you for having me so the past couple of years has been a tricky backdrop for investors to navigate in UK smaller companies since interest rates of started rising at the e... Read More

Key Insights

• 🤳 Adisan Investment Trust's outperformance is attributed to its focus on valuation and buying at a discount to intrinsic value, avoiding overvalued companies, and investing in companies with self-improvement potential.
• 👥 The Trust's investment style is fundamentally focused rather than price and earnings momentum focused, differentiating it from many peer groups.
• 💦 The Trust fell behind peers in the past year due to the absence of consumer stocks, limited M&A activity in the industrial sector, and a few investments that did not work out.
• 🤗 The UK smaller company market currently offers more value opportunities due to outflows from open-ended funds.
• 🍧 The impact of a possible recession in 2024 on the UK smaller company market will vary depending on the portfolios, with some companies having little exposure to the UK.
• ☠️ Interest rate cuts in 2024 could potentially improve risk appetite and attract more assets into the UK smaller company sector.
• 🈷️ The Trust believes that it won't take much to see significant moves in the market, and they expect it to happen within the next 12 to 18 months.

Questions & Answers

Q: How has the Adisan Investment Trust achieved outperformance in the past years?

The Trust achieved outperformance by focusing on valuation, avoiding overvalued companies, and investing in companies with self-improvement potential, even in difficult markets.

Q: Why did the Trust fall behind peers in the past year?

The Trust did not own consumer stocks that experienced a significant recovery, and it did not benefit from any significant M&A activity in the industrial sector. Additionally, a few investments did not work out as expected.

Q: Are there more value opportunities in the UK smaller company market currently?

Yes, the outflow of money from UK smaller company open-ended funds has made the market more attractive in terms of valuations. The Trust has recently made investments in companies trading at levels that offer better returns compared to the sector.

Q: How will a possible recession in 2024 impact the UK smaller company market?

The impact will differ across portfolios. Some companies listed in the UK small company sector have little exposure to the UK and may not be significantly affected. The market may already have bottomed by the time the recession is announced.

Summary & Key Takeaways

• Stuart Wion attributes the Investment Trust's outperformance to their focus on valuation and buying at a discount to intrinsic value.

• The Trust avoided investing in companies trading at significant premiums to takeover valuations and focused on growth companies during the zero interest rate period.

• The Trust also targeted companies that can improve themselves even in difficult markets, with their investment style being fundamentally focused rather than price and earnings momentum focused.