Investor Meet Company, Fevertree, Closet Trackers, Politics and the Environment

I recently came across a company called “Investor Meet Company” (see https://www.investormeetcompany.com/ ). They claim to enable individual investors to meet with company directors over the internet, i.e. via a digital web cast. The service is free to investors but there is a small charge to companies who take part.

The company was formed in 2018 by two founders, Marc Downes and Paul Brotherhood, who seem to have lengthy financial backgrounds and the web site looks professional. However, their contract terms are over complex and their privacy policy likewise so I am not rushing to sign up. They also invite you to provide details of companies you are interested in, which may be your holdings, which is not ideal. But if any readers have experience of this service, please let me know.

I mentioned Fevertree (FEVR) in my last blog post and Phil Oakley’s review of the business. Today the company issued a trading statement which was positive – it mentions “acceleration in key growth markets of the US and Europe in the second half”, but UK performance seems to be mixed. Growth in the USA is now expected to be c. 34% which is ahead of previous expectations. But the overall revenue forecast of £266 to £268 million is less than the previous consensus brokers’ forecast. The share price is up 7.8% today though. I may have to look at this business again because US growth is key to the share valuation.

The Financial Conduct Authority (FCA) have fined Janus Henderson £1.9 million for running two funds as “closet trackers”, i.e. actually closely tracking an index while charging high fees that are more normal for actively managed funds. This apparently was particularly obnoxious because they did not tell the investors in the funds that they were switched to a passive approach in 2011. The funds affected were Henderson Japan Enhanced Equity and Henderson North American Enhanced Equity. Investors have been paid compensation. Investors in funds need to be very wary that the fund managers of actively managed funds are actually putting in the effort and not sitting back and being a pseudo index tracker while charging high fees.

I watched some of the debate last night between Johnson and Corbyn but as it was so trivial in content I turned it off fairly quickly. I can imagine a lot of people did. The programme producer and compere can be mostly blamed for allowing such bland questions to which one could guess the responses and allowing evasions and irrelevant interruptions. The format of the US presidential debates is so much better.

Rather surprisingly I received a flyer in the post yesterday from an organisation called “Tactical Vote”. If I go to their web site it advises me that the best choice for me is to vote Labour in the Bromley and Chislehurst Constituency. The flyer makes it clear that their agenda is to keep the Conservatives out! But I suspect that they won’t get far in my constituency as Bob Neil had a 10,000 majority last time. If anyone was to switch it might be more likely be to the Brexit Party or the Liberal Democrats but there is not even a Brexit candidate standing so far as I can see. I am all in favour of “tactical voting” in some constituencies but we really need reform of the political system so that we have better representation. A transferable second vote system as we have for London Mayor is relatively simple. Tactical Vote seem to be pursuing a false agenda though; they should call themselves the “Labour Vote Promoters”.

One of the hot political issues, at least so far as the minority parties are concerned as the major parties are more focused on Brexit, the NHS and give-aways in the current General Election is the environment, i.e. how we become carbon neutral by 2050 or a date of your choice. Even the Conservatives wish us all to be driving electric cars, changing our home heating system and changing our way of life in other ways to avoid disastrous climate change. There was an interesting article in today’s Financial Times showing how this is quite pointless because China will soon be emitting more carbon from burning coal than the whole of the EU. They are expanding the number of coal power stations and the result will be to offset global progress in reducing emissions. In 2017 China produced 27% of world CO2 emissions, while the UK produced 1.2%. China’s emissions have been rising while the UK’s are falling so any extreme efforts by the UK are not likely to have much impact on the world scene.

However if you want to save the world and cut your heating bills (the latter is a more practical objective) I suggest looking at product called Radbot from Vestemi. The company was founded by a long-standing business contact of mine. It’s basically an intelligent radiator valve that monitors when a room is occupied and adapts to your usage.

Apart from that point, I consider there is so much misinformation being spread around about climate change and the impact of CO2 emissions that it is impossible to comment on the subject intelligently enough to refute much of the nonsense in a short blog article. But I do think it might be helpful to reduce the population of the UK which is just getting too damn crowded and leading to housing shortages, congestion on the roads and in public transport and other ills. That would be a better way of reducing emissions.

Part of the problem is that the NHS has become very good at keeping people alive despite what some politicians believe, while immigration has boosted numbers as well. You can see this in the latest forecasts for London’s population which is likely to grow by 18% to 10.4 million by 2041. See https://data.london.gov.uk/dataset/projections-documentation for more details.

Those are the issues politicians should be talking about.

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

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General Election and the Stock Market Impact

We finally have a possible resolution of the impasse in Parliament as a General Election is to be held on December 12th. That’s after the Speaker (not Bercow needless to say) rejected two wrecking amendments to a simple Bill authorising the election. My spirits were elated by this news because it finally means that the uncertainty over Brexit (will we or won’t we depart) may soon be resolved. That uncertainty has been damaging to UK business as their plans were put on hold, and has caused a fall in the pound as the world saw that we were in a political crisis and there was a risk of a hard Brexit. It also meant little other business was getting done in Parliament as the Government had no overall majority.

Now we have the situation that with a large Conservative lead in the opinion polls it seems likely that Boris Johnson will be returned with a Commons majority and will be able to push through his Brexit Withdrawal Bill. That Bill does seem reasonable to me in many regards, as a Brexit supporter. It avoids a “hard”, no-deal Brexit which was certainly going to have some impact on business, although not as much as some people claimed. It also seems likely that the marxist ambitions of Jeremy Corbyn and the Labour Party will be a dead letter for at least a few years.  I expected that the stock market would be lifted by this news but it has not happened. Why?

Perhaps some risks are still perceived. One is that the Brexit Party will split the right-wing vote in individual constituencies thus allowing other parties to win them. Or there could be mix of parties in the resulting Parliament with no overall majority which would put us back at square one. The key is the stance of the Brexit Party where Nigel Farage is opposed to the Withdrawal Agreement as he basically thinks it concedes too much to the EU (over fisheries, future trade, future regulatory alignment, etc). But if he wants to be certain of obtaining Brexit he has to think again and form a pact with the Conservatives. The Brexit Party has already been targeting Labour seats and that is surely a good focus for them leaving the Conservatives to target marginals and traditional Tory seats. As a relatively new Party, the Brexit Party probably does not have the resources to fight all the constituencies effectively in any case. Better to focus on a few. That way the Brexit Party could achieve some seats in Parliament for the first time and have a longer-term future with some say in Government and the future negotiations with the EU. The latter still leaves a lot to be settled under the “Political Declaration” so there is much to be decided.  Otherwise the Brexit Party surely has no future other than as sheep in the wilderness.

But all this complexity is probably lost on most investors, particularly overseas ones who dominate the UK stock market. They probably will not be convinced that the UK has returned to some sanity until a clear election result appears.

But as always I am optimistic. I am betting it will be resolved in a satisfactory way as most voters are fed up with the political gyrations and many of the worse MPs have been destroying their own reputations by repeated “about-faces”. Boris Johnson has to clean out the Augean Stables that are the Houses of Parliament.  To quote: “For the fifth labour, Eurystheus ordered Hercules to clean up King Augeas’ stables. Hercules knew this job would mean getting dirty and smelly, but sometimes even a hero has to do these things”. That’s politics in essence.

For those opposed to Brexit and still clutching at straws, the National Institute of Social Research (NIESR) has reported that they expect UK GDP to be 3.5% lower in ten years’ time under the proposed deal. But the Treasury and the Governor of the Bank of England do not agree. It depends on the terms of any free trade agreement that is negotiated with the EU. I am sceptical that there is likely to be any negative impact. Economic forecasts of just one or two years ahead are notoriously unreliable. Ten-year forecasts are simply incredible. The latter cannot take account of unexpected events and economic trends, and tend to ignore the adaptability of businesses. I suspect a more positive outlook for the country might stimulate more confidence in business and investment therein and offset any minor other impacts. In essence a Government with a good majority and a unity of purpose is the key. Perhaps readers should consider tactical voting to ensure that happens.

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

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