What strange times we enjoy. Elon Musk and President Trump seem to have fallen-out (it was only a matter of time perhaps?) and all Musk entities are threatened with financial consequences and Tesla falls by the most in one day… we don’t have any or funds which hold them, so we can look-on from the sidelines.
Meantime, for us, May was one of our best ever months, not so much a rebound from the tariff traumas but continuing better reflections in the values of our core all rather boring holdings (indeed, our qualifying business asset portfolios of AIM stocks seem to have led the charge… generally, AIM is so undervalued anyway so not unsurprisingly due a big rebound). This has helped propel our total funds under management to an all-time record and June is seeing that continue and no, not swollen by lots of new money either. So overall, clients will see this reflected in their next statements, unless ‘things’ change between now and 5 July.
I repeat my earlier warning, however. The US markets seem to have regained their earlier frothy poise (albeit not back to the autumn’s highest levels) despite these indicators of acute volatility circling and the likelihood (inevitability?) of other surprises (shocks). However, we continue to buy some tremendous value especially in UK stocks and funds (like one which invests in hot air) but for the ‘rest’, whilst we are not superstitious the old adage of ‘Sell in May and go away’ could well come true in ‘25. We continue to manage assets very carefully and with a far warier eye on downside risk mitigation than usual.
The resurgence in certain stocks and sectors has seen us trimming some assets to redeploy the cash as well, including our NatWest holding, shares I suspect we bought cheaply from HM Government when it was selling them lowly. We are told the Country lost £10billion from buying the stake to support it at the time of the financial crisis (but the losses arose by then selling shares too cheaply).
All I’d ask is ‘why on earth were we in such a rush to sell the shares at give-away prices when had we waited, ‘we’ could have all made a profit instead?’ In September 2020 the Bank’s shares were under £1. Now they’re £5.30. The Bank’s now ‘worth’ £42billion; in Sept 2020 it was £7.7billion. Perhaps I’m too simple to understand politics or economics…
Good news/bad news
Another Investment Trust is going to be disappearing soon, Fidelity Japan. We are disappointed it is going but not unhappy that the 7.5% discount will disappear (so a bonus of 8% for investors, all else remaining the same). It is a nice Trust with a not unreasonable discount but there we are – shareholders did not support its continuation. Still, now it is an extra return for our investors over and above whatever the underlying assets do – if you held an identical Fidelity Japan open-ended fund, you would never receive a bonus…
RM Infrastructure launches a tender offer to buy our shares at the asset value – 88.59p. The share price has been c71p and at which we have just been buying more. That’s a 25% uplift from a scheduled path of continuing action. 80% of the shares will remain but we don’t mind! The risk increases as the pot diminishes but we are aware of that.
Dr Martens jumps on slightly better results than expected but better prospects. Silver, one of our defensive assets, rises to its highest levels since 2011 – have new investors missed their opportunity as it pips gold’s performance (which in our view has been rising too much)? CMC issues encouraging figures and hopes – and the shares slump… it’s a strange market sometimes. Meanwhile, global giant Diageo slumps to levels not seen since July 2016 – now seeming very good value to me.
Property as investment
On 2 June, finally after some years of waiting, we have sold our old property, Sterling House. Our agents have been as patient as we have been throughout (thank you Webbers) but a sensible offer was received and we could negotiate and new owner occupiers will be making this their latest business branch here in Barnstaple – well done to them.
The Company did have a mortgage upon it and has done very nicely upon investing that borrowed capital in the markets instead of repaying the debt but come the end, we had to make a payment on top, to add to the sales’ proceeds, as they didn’t cover the mortgage… Anyway, now we stop shelling-out debt interest, Business Rates, insurance, water and electricity standing charges, repairs, maintenance and staff monitoring/sorting time… However, we shall have many fond memories there, especially as it became the real launch pad for the Company with a significant physical presence in the heart of Town.
Still, for those who enthuse about ‘property as an investment’, which I believe very much it can be but remember, excuses for ‘ah but it’s different’ but you must recognise how much it has cost in opportunity value all these empty years as well as the fact that on sale, it needed to have been some 40% higher than what we realised if it was just to have kept pace with inflation from 1991. It can happen to house prices too, especially when they are so over-priced! That said, we are full of high-yielding commercial property investment funds as they are so cheap…
10% of non-doms gone – and more lining up
I have commented on this ‘policy’ several times before and now a scathing analysis has shown the flaws in the objectives and the cost to the UK economy as well as tax revenues:-
At least 10% of non-doms have already left UK
It’s sad how political naivety (fiscal naivety?) can be allowed to appear to be fair societal objectives yet costing the State rather than providing more tax (I suppose the good ol’ politics of envy?) The same would apply to a ‘wealth tax’ too.
My best wishes
Philip J Milton DipFS CFPCM Chartered MCSI FPFS FCIB
Chartered Wealth Manager
Fellow Of The Personal Finance Society, Fellow Of The Chartered Institute Of Bankers
