The FTSE 250 fell 5.6% in Q1, while the FTSE Small Cap and AIM All Share indices declined 4.9% and 5.2% respectively. Despite the overarching gloom, our faith remains in good-quality, well-run businesses trading at valuations that feel increasingly disconnected from their underlying fundamentals. The UK may be unloved, but that doesn't mean it's uninvestable; we are taking this opportunity to identify and add to exciting, undervalued businesses with long-term growth potential.

Our top performer for the quarter was Beazley, the specialist insurer, which delivered a strong set of full year results. Written premiums surged, and management demonstrated their confidence by announcing a $500m share buyback. The market rewarded them accordingly – shares rose +13.5%, and we remain supportive shareholders. Following closely behind, A.G. Barr, the soft drink dynasty behind IRN-BRU (second in line as Scotland’s national drink after Scotch), continued to deliver steady growth in a choppy consumer environment.

A familiar name we added to this quarter was Ashtead Technology. Based in North-East Scotland, Ashtead provides specialist subsea rental equipment – from remotely operated vehicles to marine growth removal systems. Despite reporting 14% organic growth and 39% inorganic growth from recent acquisitions (Seatronics and J2 Subsea – their largest to date), shares fell 5% in Q1. We saw that as an opportunity and added accordingly. We also topped up our holding in Craneware, the healthcare software firm which we entered last quarter.

On the hospitality front, Fuller’s continues to be weighed down by poor sentiment, despite a strong portfolio of assets across London and the UK and decent underlying results. The last two weeks of sunshine may help shift the mood and we remain optimistic about the long-term case for Britain’s pubs.

The culprits dragging down CHSC this quarter were Trustpilot and Trainline. Trustpilot, the online reviewing platform, saw their share price drop alongside the wider global tech sell off and Trainline’s share price was bruised by rumours of a rival government app. Having met with Trainline’s management team in February this quarter, we were reassured that the market reaction overestimated any threat, and their long-term growth strategy remains firmly on track… These are well established companies that have weathered the storms of numerous political and economic cycles, and we believe are well positioned to cope with market malaise. 

This quarter we initiated a new position in 4Imprint, the custom-branded merchandise company based in London, after a positive meeting with their experienced management team. Founded in 1921, 4Imprint is the name behind those personalised pens, tote-bags and water bottles that seem to end up everywhere. The business is quietly delivering excellent returns whilst growing their international presence.

It was a difficult quarter for CHSC, yet while headlines point to weakness, we remain focused on the fundamentals and long-term prospects of the businesses we own.

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.