A week used to be considered a long time in politics, given recent events the same could be said about financial markets. Since ex-Chancellor Kwasi Kwarteng’s mini budget on 23 September, it’s been an eventful journey for investors in the UK. Throw into the mix a re-escalation in the Russia/Ukraine war and you could be mistaken for thinking we are living in abnormally volatile times. The reality, however, is that an uneventful global and economic backdrop is a greater exception.
A glance back over the last half century
MSCI European Small Cap Total Return
There has always been something to worry about
Big shifts in sentiment offer great opportunities
Recent purchases that made our ‘buy’ list
Bank of Ireland:
Regional bank operating in a domestic oligopoly
Bank of Ireland met our investment thesis because it is strong operator in a consolidated market, supported by attractive domestic dynamics; strong GDP growth, a young population and a destination for inward foreign direct investment. The Bank is enjoying attractive loan growth and improving returns on equity which are supported by a strong capital base.
The relative position of the company has improved versus the peer group’s deterioration in mainland Europe and rising interest rates support returns for the bank.
Siegfried:
Swiss contract development manufacturing organisation (CDMO)
Siegfried makes small molecules that are components of pharmaceuticals’ medications. The company is well positioned in a market that will see long term non-cyclical growth. Pharmaceutical companies are increasingly outsourcing the production of the molecules they need. This is a difficult market for new entrants as there are significant barriers to entry linked to the requirement for regulatory approval for production plants.
Companies in this sector also stand to benefit from consolidation as larger operators look to take advantage of mergers and acquisitions to improve their positions.
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