Category: Companies

Unilever Demerger Voting

One of the bigger holdings in my share portfolios is Unilever; it probably is for many UK stock market investors. It is proposing to demerge its ice cream businesses containing the Magnum and Ben & Jerrys products, followed by a share consolidation. The board has recommended the proposal to shareholders.

This should be a fairly simple business decision. What benefits might transpire from the demerger? Will the ice cream businesses benefit from a clearer focus? They are certainly large enough to stand on their own and existing Unilever shareholders will get shares in the new Magnum company. Are there any synergistic production or marketing costs that will be lost? It is not clear.

Flogging ice cream might be a more seasonal business than selling toothpaste or soap but less so than in the past.

The document Unilever has issued does not provide much information justifying the demerger but I do not feel capable of arguing with the wisdom of the directors in such circumstances.

I have therefore voted in favour of the demerger.

Note that there is some highly amusing bullshit on the Unilever web site about their new marketing model. It reads:

  • In-house graphic design studios called Sketch Pro are unlocking new levels of innovation, agility and impact.
  • The new approach will support our global portfolio by seamlessly integrating brand strategy, cultural insights, creative excellence and AI innovation.
  • For Home Care – a category traditionally focused on functional benefits – this is helping shift the perception of our brands from purely rational to deeply emotive.
  • By creating emotionally resonant content and design that further accentuate features like fragrance and aesthetics, we’re shifting consumer perception from purely rational to deeply emotive.

So now you know.

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

You can obtain notifications of new posts in future by following me on Twitter (now “X”) – see https://x.com/RogerWLawson where new blog posts are usually mentioned.

Verici DX Webinar

I watched a webinar presented by Verici DX (VRCI) this morning on the Investor Meet Company platform. This is an early-stage biotech company who specialise in transplant rejection diagnosis. They do have some revenue but are still loss making. They have done a recent fund raising which at least means they won’t run out of cash in the near future.

As a kidney transplant patient of over 20 years standing I do well understand the importance of picking up rejection episodes quickly so that treatment can be executed promptly. I only acquired a few shares in the company as a free spin-off from another holding. But will the company really generate profits in the long-term? I think it’s too early to tell so I am unlikely to invest more in the business until that becomes clearer.

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

You can obtain notifications of new posts in future by following me on Twitter (now “X”) – see https://x.com/RogerWLawson where new blog posts are usually mentioned.

System1 Group – an Interesting AGM

This morning I watched the Annual General Meeting of System1 Group (SYS1) as I own a few shares in the company. This was broadcast on the Investor Meet Company platform and was certainly worth watching. The company issued a Q2 trading update on the 23 September which was effectively a major profit warning as it indicated full year results will be below forecasts.

I bought my first tranche of shares at 730p – they are now about 270p – ouch! A good job I only bought a few.

A shareholder (Maynard Paton?) present at the meeting expressed concerns about the executive management but the Chairman said the market changed fundamentally in August caused by the change to the Trump tariff regime. He still has 100% confidence in the executive team.

The directors did answer the questions from shareholders well and I was positively impressed by the responses. I will continue to hold for the moment but it could be some time before the share price recovers.

This was a good example of how useful an AGM can be.

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

You can obtain notifications of new posts in future by following me on Twitter (now “X”) – see https://x.com/RogerWLawson where new blog posts are usually mentioned.

Apple’s Problems

An article in Investors Chronicle a couple of weeks ago reminded me of some of the problems Apple recently faced. It mentioned that a US legal judgement had upheld a complaint against Google for maintaining a monopoly on internet search services. Apparently Alphabet pay the iPhone maker about £15 billion per annum to keep Google as the default search software in Apple’s Safari Browser. The legal judgement could save Apple even more money apparently for reasons I don’t quite understand. But if true it shows how such cash is involved in the business of search.

Apple’s other problem is that they are clearly reaching market saturation in some of their phone markets and are seeing increasing competition in China. Although they are bringing out new models – the latest being the iPhone 17 and iPhone Air, they do not seem to have much more in capabilities than the iPhone 13 Pro I am currently using. Despite being over 5 years old, the battery life on my current phone is still good. I can see little reason to upgrade my phone.

Apple really do need some revolutionary new products rather than just minor phone improvements.   

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

You can obtain notifications of new posts in future by following me on Twitter (now “X”) – see https://x.com/RogerWLawson where new blog posts are usually mentioned.

Jaguar Mistakes and Cyber Disruption

I am a longstanding owner of Jaguar cars, having bought my first one in 1967 (albeit a second hand one). Since then I have owned various XJ models and latterly an XE which is very cheap to run.

I am on Jaguar’s and my local dealer’s mailing list. So I now get regular emails encouraging me to buy a Land Rover as there are no new Jaguars now on sale. There is only one problem – I don’t want to buy a brick shaped vehicle which is bulky and expensive to both buy and run! Their latest advertising also featured pink cars fronted by androgynous persons and I wouldn’t want to be associated with such a product. Management incompetence is destroying a previously strong brand.

The latest mistake by Jaguar Land Rover (now owned by Tata) is to suffer a cyber attack which has caused them to shut down their IT systems. New vehicle sales cannot be registered. They say there is no evidence yet of customer data being stolen but I’ll wait to see whether I believe that. See FT article for more info: https://www.ft.com/content/ba88baca-cd59-48d3-a982-e73c9401b85a

Jaguars became reliable of late (not necessarily Land Rovers) and local servicing has been good but I’ll need to look at alternatives if I ever buy a new vehicle in future.

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

You can obtain notifications of new posts in future by following me on Twitter (now “X”) – see https://x.com/RogerWLawson where new blog posts are usually mentioned.

Winter Fuel Payments, Disability Changes, Garden Review and JGGI Webinar

The  Government has backtracked on scrapping Winter Fuel Payments except for poor folks like me (I’m joking). See BBC report here: https://www.bbc.co.uk/news/live/c5yxvdl4d0pt . But it just adds one more needless complexity to the tax system.

The Government is also working on reforming disability benefits which are horribly complicated and where they wish to reduce the total expenditure. As a disabled person with minor problems I don’t qualify for PIP but I do get an “Attendance Allowance” which is not means tested.

If you want to get an impression of how complicated are disability benefits there is a good article in the latest Disabled Motoring UK magazine on the subject. The system needs simplifying!

The entitlement to a Free Car and associated costs under the Motability scheme is also clearly getting out of hand. See this for how to qualify: https://www.citizensadvice.org.uk/benefits/sick-or-disabled-people-and-carers/help-for-disabled-travellers1/motability-scheme/getting-a-motability-car/ . Needless to say, I don’t qualify and the only contact I have had with someone who did was when a new scheme member ran into my vehicle after picking up her new car a few years ago. Exited a side road without looking or stopping. Seemed to confuse the foot pedals. She was very apologetic.

Our garden is looking very well now we have had some rain. Photo below.

The yellow-flowered plant is a bunch of Phlomis which is a hardy perennial. There is a purple variety which seems much less tough. The roses are mainly from David Austin and are good hardy ones with few diseases. Plants need to be tough to survive in our garden.

Yesterday I attended a webinar presented by JPMorgan Global Growth and Income Trust (JGGI) which I hold. First purchased in July 2022 and with an annual total return since of 8.5%. They run a global unconstrained portfolio of 50 to 90 stocks giving a yield of 4.27% (some paid out of capital gains) and with an ongoing charge of 0.43%.

It seems to be well managed and they certainly have a large investment research team of analysts.

I was positively impressed so I will continue to hold.

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M&S Cyber Attack – Disgraceful Incompetence

Marks and Spencer (MKS) have suffered a cyber attack that put some of its IT systems out of commission and exposed their customers to loss of personal information. Its on-line clothing business was shut down for several weeks causing very substantial financial losses.

According to an FT report this was caused by criminals breaching its systems using “social engineering tactics via a third-party supplier”. I presume they mean that identity impersonation was used to obtain access to M&S IT systems.

Apart from the fact that the heavy use of outside contractors will always make a company vulnerable, weak identity verification is always going to be a problem. Sensitive systems should be protected against identity theft by using better than simple password security. Companies such as Intercede (IGP) provide highly secure software products to secure identities – I hold shares in them.  

A company as large as M&S should know better. When your company relies on functioning IT systems to process orders, you really do need to take steps to forestall such cyber attacks.

FT article:  https://www.ft.com/content/19dcd993-877e-43c5-aab4-c727e574e3f2

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

You can obtain notifications of new posts in future by following me on Twitter (now “X”) – see https://x.com/RogerWLawson where new blog posts are usually mentioned.

Alliance Witan AGM

This morning I attended the Annual General Meeting of Alliance Witan (ALW) investment trust. This was a “hybrid” AGM with clearly good attendance at the physical meeting in Scotland and virtually via Zoom. It was well organised and I had no difficulty logging in or voting beforehand.

The Chairman Dean Buckley managed the meeting well and answered questions clearly.

I have held shares in this company since 2015 and it helps to give me a balanced stake in global equities. My annual return has been 7.7% p.a. according to Sharescope although I think it would have been better if I had not traded in and out of the shares since 2015.

The performance against it’s benchmark has been disappointing in the last year although this might have been affected by the merger with Witan. Like other global equity funds it’s low holdings in the big 7 tech companies has affected it also.

The company uses a “multi-manager” approach to ensure diversity of thought on new holdings. It has increased dividends for the last 58 years so is attractive to investors looking for stable dividends in real terms with some capital growth.

The Chairman said they had decided to alternate the AGM between Dundee and London in future but that attracted some criticism from a couple in the audience – is not Scotland the most beautiful country?

Another question raised was about the investment in a tobacco company which the board does not rule out but they do impose some restrictions on sectors such as ruling out thermal coal. Otherwise they do not interfere in investment decisions.    

My feeling is I am happy to continue holding this trust but performance does need to improve.

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

You can obtain notifications of new posts in future by following me on Twitter (now “X”) – see https://x.com/RogerWLawson where new blog posts are usually mentioned.

Argentex + Podpoint + M&S Problems

My wife has suggested we buy some Marks and Spencer (MKS) shares after the shares fell by 5% after a reported cyber attack. She is one of their customers and certainly the business does seem to have improved in the last year after some years of disappointing results. But on-line orders have been halted which does not bode well for the competence of its IT management. I will study it before making a recommendation but at a glance it looks a quite low-growth business with a low dividend yield so even if it is temporarily cheaper it does not inspire immediate enthusiasm.

Last week the out of the blue bad news for Argentex (AGFX) shareholders was the suspension of the shares after “the company experienced a rapid and significant impact on its near-term liquidity position, driven by, inter alia, margin calls linked to its FX forward and options books”. It clearly needs a bale-out from a trade buyer or other rescue financing. It seems obvious that they had not adequately hedged their FX positions and has come in for criticism for not getting the basics of such a business right. Even experienced investors have been caught as a result and clearly this kind of business might be one to avoid.

Another casualty last week was Pod Point Group (PODP) who announced problems with bad debts and likely takeover offers. It is clearly in major financial difficulties and needs rescuing. Pod Point provides electric car charging devices and services which at a glance should be a major new demand area. The company listed in 2021 but has lost more than 97% on the share price since then. So much for great ideas!

I recall reading the admission document before the IPO and the risk warnings were numerous plus limited information on the competitors which included major energy companies. I did not invest then on the basis it was best to wait and see and it’s been downhill ever since.

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

You can obtain notifications of new posts in future by following me on Twitter (now “X”) – see https://x.com/RogerWLawson where new blog posts are usually mentioned.

Should I Sell US Stocks?

Easter gives one time to review your share portfolios. In last week’s Investors Chronicle John Rosier reviewed his portfolio and the impact of Trump tariffs. He has been “purging” US exposure from his funds portfolio. He has sold Polar Capital Technology (PCT) and JPMorgan Global Growth and Income (JGGI), both of which I hold, and several others. The exposure of Fundsmith Equity to US Stocks also proved unhelpful to his overall performance and mine.   

With the S&P 500 down 10% in the last six months, is it time to refocus on other markets and dump US holdings? I am not so sure.

It has certainly been the case that buying the US markets has been a simplistic trading strategy in the last couple of years. You couldn’t go far wrong by investing in US companies or US index trackers. Tariffs will certainly have a negative impact on the US economy and several other countries. China should be particularly badly hit.

But has the world really changed?  Famous investor Warren Buffett has said in the past “never bet against America” and he has proved right so far. The size and vibrancy of the US economy is not easy to beat and trade tariffs may only have a temporary impact. The US economy is so attractive to the best and brightest immigrants that it is like a lamp to a moth. That accounts for much of the success of the US technology sector in recent years.

It’s exceedingly difficult to predict what will happen to the world economy and changing portfolios based on short-term economic forecasts is surely a mistake.

There may be some opportunities to pick up as panicking investors dump holdings of US stocks or funds because they are scared of what Trump might do next, but this is surely a time for holding one’s nerve, not for responding to emotions. The dominance of index tracking funds is making the waves of emotions that sweep stock markets more pronounced than ever but now is not the time to ride those waves.  

With signs that progress on peace in Ukraine and Gaza is looking more likely, it is time to be optimistic rather than pessimistic about the state of the world and the major economies.

The UK economy is a different story though. Higher taxes are going to have a negative impact while Trump is aiming to reduce US taxes by cutting Government expenditure. He surely has the better strategy.

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

You can obtain notifications of new posts in future by following me on Twitter (now “X”) – see https://x.com/RogerWLawson where new blog posts are usually mentioned.