Who would have thought that in a year of war in the Middle East (not to mention ongoing struggles in Ukraine), increasing trade tensions and with China’s economy in trouble that the S&P would have returned 28.1% with one month left to go?

As we have discussed before (and so will not spend too much time on here), this has been a remarkably “narrow” market where relatively few companies have seen their share prices rocket, but crucially those that have done well have tended to be enormous businesses, hence the index return (which is weighted to company size) has looked so healthy. Of course, the Magnificent Seven* technology stocks have grabbed the headlines but we have also seen the likes of Walmart, Costco, all the major US banks and even General Electric shares generate over 50% returns in 2024.

To give readers in little old England an idea of the scale of some of these companies, Costco’s own-brand clothing line (Kirkland) generated $56bn in revenue last year – that is larger than Nike, Coca-Cola, and United Airlines!

Against this backdrop we made two relatively small changes to the Esk portfolio. The first was that we sold our relatively small position in Remy Cointreau after a short and turbulent time as investors in the cognac producer. We feel that Remy’s heavy reliance on Chinese luxury spend is problematic given China’s aforementioned economic troubles and that was before that latest round of tariffs slapped on the import of EU alcohol in China. The proceeds from this sale were reinvested into Canadian-listed Alimentation Couche-Tard. Couche-Tard own and operate 17K convenience stores and petrol stations mostly under their Circle K brand across North America and, increasingly, mainland Europe. Alain Bouchard, Couche-Tard’s founder and CEO, opened his first convenience store in 1980 in Quebec and from these humble beginnings has grown into a £43bn business (by market cap). We see value in Couche-Tard shares at current levels and so have begun building a position.

*Apple, Microsoft, Google parent Alphabet, Amazon.com, Nvidia, Meta Platforms (facebook) and Tesla
 

The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article.

Please also note the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.