February/March earnings season provided a welcome focus on individual company results in a market that is otherwise fixated on macro (rates) speculation.

These early-year company updates make for interesting reading and provide a thought-provoking insight into how management teams are seeing business at the coalface.

The overwhelming message from companies that we are invested in is that things are not as bad as the headline economic news would have you believe (thank you the BBC) and that now is a time to keep one’s head down and focus on business-as-usual. Yes, customers are more cautious now but, no, the world is not in the grips of a grim recession such as we saw in 2008/9. We were particularly heartened to see multiple executives calling the bottom of the recent downturn in the alcoholic spirits market, which has hit our holding in Diageo disproportionately in our view. At their recent update, Remy Cointreau pointed to ‘improving momentum’ in their US sales, while Pernod Ricard predicted a return to growth in the second half of 2024. We have been steadily adding to our holding in Diageo over recent months and note that they sold…
-    …250,000 pints of Guinness at Twickenham two weeks ago – not bad going at £7.50 a pop!


Also of note was Halma’s strong trading update and announced €85m acquisition of Rovers Medical Devices. Rovers designs and manufactures sample collection devices used in the prevention and diagnostics of cervical cancer and achieves a margin over 40% - now that is what we call pricing power. Halma shares remain well below their historic high and look good value to us at these levels.

Elsewhere in the Fund, we took the opportunity of a strong run-up in InterContinental Hotels Group (IHG) shares to trim our holding. IHG is a remarkable business, but with shares close to 3x their COVID-lows, we thought now was a prudent moment to take some profits on the position.

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.

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