Mark Slater: the beaten-up UK growth shares we are buying

TL;DR

Mark Slater discusses the underperformance of UK mid and small cap stocks due to the changing interest rate environment and the fear of recession. He highlights that many companies with strong business operations have seen their share prices decline, presenting buying opportunities.

Transcript

hello and welcome to the latest Insider interview Our Guest today is Mark Slater manager of the Slater growth fund mark thank you very much for coming in great pleasure we last had you in for an Insider interview about two years ago back then performance was going very well but since about November 2021 performan has dropped off why is that perform... Read More

Key Insights

• 😨 Performance in mid and small cap UK stocks has been weak, with the interest rate environment and fear of recession being contributing factors.
• 💪 Share prices of companies with strong business operations have not reflected their positive fundamentals.
• 🚨 Buying opportunities have emerged in the market due to the aggressive devaluation of stocks.
• 🙈 Optimism is seen in companies initiating buyback programs, indicating that shares are undervalued.

Questions & Answers

Q: What has caused the weak performance of mid and small cap UK stocks?

The changing interest rate environment and fear of recession have led to the devaluation of these stocks. Other investment options, such as guilts, have become more popular, creating competition for money.

Q: Can you provide examples of companies with strong business operations that have underperformed?

Companies like Ciro and franchise Brands have strong business operations, generate cash flow, and have favorable growth prospects. However, their share prices have not reflected these positive factors.

Q: How do you respond as a fund manager during difficult periods?

It is important to remind oneself that things will get better. Being on the front foot and actively looking to buy during times of low prices is crucial. Stress testing beliefs in the companies owned is also necessary.

Q: Are there any areas of the market showing promise for 2022?

Mark Slater focuses on company-specific opportunities rather than sectors. However, he mentions franchise Brands and a company called Team Internet as recent additions to their portfolio, demonstrating potential for growth.

Summary & Key Takeaways

• Mark Slater explains that the performance of mid and small cap UK stocks has been weak, primarily due to the changing interest rate environment and the fear of recession.

• He is surprised by the extent of the devaluation of these stocks and believes it is partly due to fashion, outflows, and competition for money from other investment options.

• Despite the weak price performance, there are companies like Ciro and franchise Brands that have strong business operations but haven't seen corresponding improvement in their share prices.