News & Insight Weekly Newsletters

03 March 2023 | William Buckhurst

That Was The Week That Was

MACRO

  • Rishi Sunak hails his Brexit deal “takes back control” of Northern Ireland
  • German, French and Spanish inflation data unexpectedly accelerated in February
  • A very strong Chinese PMI manufacturing data release for February, the highest reading since April 2012
  • “Bojo” doesn’t want to lose his marbles. At a speech where he undermined the Northern Ireland agreement Boris Johnson also mentioned his desire to keep the Elgin Marbles – in direct contrast to past rival George Osborne who is the Chairman for the British Museum

COMPANY NEWS

  • Union Pacific announced a new CEO following pressure from hedge funds
  • Ocado reported that pre-tax losses widened to £500.8m last year, up from £176.9m in 2021
  • Persimmon shares fell as they announced a slower sales rate for the first eight weeks of this year compared to the same period last year
  • Melrose revealed progress in both their auto and aero divisions and gave more guidance on the de-merger of Dowlais
  • Despite security concerns, a UK listing of ARM looked less likely this week. Valuations are equally unclear as bankers pitched ranges from US$30bn to US$70bn (clearly an art not a science)
  • CRH joined a growing trend (following Linde) by announcing that their listing was moving to the US. Not as controversial as Ferrovial moving their HQ from Spain to the Netherlands though
  • Pre-Cheltenham Festival, Flutter plc (previously known as Paddy Power Betfair) announced results that were slightly light due to activity in Australia but “in line” year to date
  • Lufthansa became the latest airline to report strong results as customers returned to travel

FUND WATCH

Warren Buffett released his latest missive to investors last week. In this, he made a less then veiled dig at the White House who have recently tried to reduce the use of stock repurchases, arguing that the practice diverts corporate funds from investing in product or market development, or equalising staff pay etc. The Sage of Omaha said:

when you are told that all repurchases are harmful to shareholders or to the country, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are not mutually exclusive).”

 SMALL CAP

Positive results from the oil services group, Hunting plc, were in line with their December update but were met by a downgrade due to thinking the shares were up with events – due to falling rig count and supply chain constraints. However, there was plenty of positive news in the announcement with a new strategy to 2030 (more geothermal and carbon-capture) and a plan for a 10% dividend increase each year until then

TECH WEEK

On the back of better-than-expected results, Marc Benioff, CEO of Salesforce, said the goal is to be “the most profitable software company in the world”. After two years of poor results, management also suggested the future is looking good and gave guidance to reach their margin goal two years faster than expected. This was on the back of significant investment from activist investors – Dan Loeb had built a stake after ValueAct Capital (Mason Morfit), Elliot Management (Paul Singer) and Starboard Value (Jeff Smith)

THIS WEEK IN HISTORY

  • 1957: On page 44, the New York Times announces it is publishing the new Standard & Poors Corporation Index of 500 common stock issues. The S&P 500 index is born
  • 1991: Markets rally as Iraq accepts a ceasefire marking the end of the Gulf War

IN OTHER NEWS

A snippet from Robert Pickering’s new history of Cazenove, entitled Blue Blood: Cazenove in the Age of Global Banking,

“On Friday mornings the Partnership Secretary would proceed on his rounds, asking each of the partners how much cash they would like for the weekend (‘Spot of cash, sir?’, ‘Oh….err…five hundred, I think.’) and would then distribute this in wedges at the end of the afternoon”.

MARKET DATA

% returns

1 Week

1 Month

1 Year

5 Years

UK Equities (% return)

0.91

-0.03

11.69

11.25

World Equities (% return)

1.80

1.48

-2.54

38.65

10 Year US Treasury Yield (%)

3.96

3.53

1.86

2.48

GBP / USD (fx rate)

1.20

1.22

1.34

1.38

 As at 3rd March 2023. Source: FactSet

 

 

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. This material has been issued and approved for distribution in the UK by VIM. ©2023 Vermeer Investment Management Limited. All rights reserved. No part of this publication may be reproduced or redistributed in any manner without the prior written permission of VIM. VIM is authorised and regulated by the Financial Conduct Authority (FRN: 710280) and is incorporated in England and Wales (company number: 09081916).

Back to News & Insights