News & Insight • Weekly Newsletters

17 September 2021 | William Buckhurst

That Was The Week That Was

MACRO

• In the UK, the number of employees on payrolls is now back to pre-pandemic levels at 29.1mn
• UK CPI rose to 3.2%, its highest level since 2012
• Inflation across the US economy slipped back, in a sign that some of the pandemic price pressures may be fading. US CPI rose by 5.3% in the 12 months to August, down from the 13-year high of 5.4% in July
• Evergrande, a Chinese property giant nursing more than $300 billion in debt, is seen as likely to default this week

COMPANY NEWS

• A court in Oakland, California, has ruled that Apple cannot stop app developers directing users to third-party payment options
• Cisco’s investor day showed how strong structural spending on IT is with Cisco talking about annual growth of 7% going forward
• Ocado’s retail business took a hit this week as it revealed a double-digit sales drop as the Erith fire and a return to more normal shopping patterns put a dent in its recent strong trading momentum
• Fevertree shares were up as, despite expensive freight bills hitting margins, the underlying business showed very strong growth outside of the UK, with sales up 32% in the US

STATISTIC OF THE WEEK

James Reed, the chairman and CEO of UK recruitment firm, REED, on Radio 4 this week was talking about labour shortages as a huge number of new jobs come on to the market. Pay for entry-level driving jobs is up 60% year-on-year

SMALL-CAP NEWS

A mix of short- and long-term sightedness this week with regards to ITM Power as the market focused on the lack of extreme revenue growth. Admittedly it was 30% growth year-on-year but that still didn’t stop the share price falling 15% on the day. For investors with a longer time horizon the story of electrolysers in the energy transition to net-zero still holds and this was backed up by a record backlog of contracts now exceeding 1,011MW – their annual capacity is 1,000MW. In light of this, there was also a mention of the management team looking at sites for an expansion of the manufacturing capacity even though they have just moved into the biggest (electrolyser) gigafactory in the world in Sheffield and have made a number of key hires as production ramps up

THIS WEEK IN HISTORY

2001: US markets reopen for the first time after the 9/11 attacks. Trading opened with a moment of silence followed by the singing of “God Bless America”. The Dow Jones closes the day down 684 points, at the time the largest 1-day point decline in history

2008: AIG is bailed out with an $85bn loan from the Federal Reserve in return for an 80% stake

 RE-OPENING TIMES

GreenSky, the online loans provider, was floated by, amongst others, Goldman Sachs in 2018 at a $4bn valuation but the company’s share price is down almost 70% since then. This week it received a takeover approach for $2.2bn, a more than 50% premium to its current share price, by guess who? Goldman Sachs

MARKET DATA

 As at 17^th September 2021. Source: Financial Express

This publication has been produced by Vermeer Investment Management Limited (VIM) trading as Vermeer Partners. It is provided for information purposes only. VIM makes no express or implied warranties and expressly disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to any data included in this publication. VIM will not treat unauthorised recipients of this publication as its clients. Prices shown are indicative and VIM is not offering to buy or sell or soliciting offers to buy or sell any financial instrument. Without limiting any of the foregoing and to the extent permitted by law, in no event shall VIM, nor any of its officers, directors, partners, or employees, have any liability for (a) any special, punitive, indirect, or consequential damages; or (b) any lost profits, lost revenue, loss of anticipated savings or loss of opportunity or other financial loss, even if notified of the possibility of such damages, arising from any use of this publication or its contents. Other than disclosures relating to VIM, the information contained in this publication has been obtained from sources that VIM believes to be reliable, but VIM does not represent or warrant that it is accurate or complete. VIM is not responsible for, and makes no warranties whatsoever as to, the content of any third-party website referred to herein or accessed via a hyperlink in this publication and such information is not incorporated by reference. The views in this publication are those of the author(s) and are subject to change. VIM has no obligation to update its opinions or the information in this publication. This publication does not constitute personal investment advice or take into account the individual financial circumstances or objectives of the client who receives it. Any securities discussed herein may not be suitable for all investors. VIM recommends that investors independently evaluate each issuer, security or instrument discussed herein and consult any independent advisors they believe necessary. The value of and income from any investment may fluctuate from day to day as a result of changes in relevant economic markets (including changes in market liquidity). The information herein is not intended to predict actual results, which may differ substantially from those reflected. Past performance is not necessarily indicative of future results.