Indholdsfortegnelse for 1123 i MoneyWeek

We launched Moneyweek 22 years ago. There has been no shortage of crises since. The dotcom bubble collapsed within months of our launch. The global financial crisis followed. Then there was Brexit (not that we considered that a crisis) and the pandemic. Regular readers will know that we’ve spent most of these 22 years worrying about the way in which central banks have misinterpreted global inflation dynamics and about the long-term consequences of very low interest rates combined with loose fiscal policy. We worried that this has distorted economies, led to massive capital misallocation and driven most asset prices (from bonds to equities and houses to art) to bubble levels. There will be inflation, we said – and when there is, rates and prices will normalise. It’s taken (a lot)…

“Value stocks have outperformed for the last 12 months... and value investors are finally getting optimistic again... Rising inflation and the cost-of-living crisis have lifted energy [and] banks and hurt growth stocks... once inflation creeps above 4% or so, market returns break down quickly as companies struggle to deal with the cost pressures... [By contrast] the value factor... tends to do quite well [even] for very high inflation rates. [In] the 1970s, value stocks performed well versus growth stocks, but even at more moderate levels of inflation around 2% to 4%, value tends to do alright. It is only once we enter very low inflation periods or deflationary periods that value tends to lose performance... [If] inflation remains high and... steadily climbing, like in the 1970s, value stocks are the…

French industrial group Schneider Electric has offered £9.5bn for industrial-software specialist Aveva. Schneider already owns 59.1% of the Cambridge-based group following a reverse takeover in 2017 and is now offering £31 a share for the remainder – a 41% premium to the pre-offer price. The Aveva board has recommended the offer. But some minority shareholders are unhappy. Peter Lampert of Mawer Investment Management told the Financial Times that “it’s an opportunistic bid taking advantage of share-price weakness in recent months”. Schneider needs to secure the support of 75% of minority shareholders for the deal to proceed, say Harriet Agnew and Leila Abboud in the FT. It would thus “only take about 10% of the overall shareholder base to reject it for the deal to be blocked”. Aveva’s shares have been…

Oil and gas explorer APA, worth $12bn, “has struggled to catch the eye of investors”, says Avi Salzman in Barron’s. But the group is well worth a look. Most domestic rivals have concentrated on US shale basins, which dry up relatively quickly. APA, by contrast, has considerable “geographic reach”. Half of its production is overseas, with operations in the North Sea and the Gulf of Mexico. It also boasts a promising project off the coast of Suriname and has just secured a deal with liquified natural gas (LNG) group Cheniere to sell LNG to Europe and Asia. Analyst Doug Campbell at investors Hotchkis & Wiley says neither the Suriname project nor the LNG deal is reflected in the share price.…

Giorgia Meloni – the leader of the Brothers of Italy, a party with roots in the fascist far right – has claimed victory in Italy’s elections and is on course to become the country’s first female prime minister, says Paul Kirby on the BBC. Meloni is likely to lead a coalition that will form Italy’s most right-wing government since World War II. Speaking after the vote, Meloni promised that she will “govern for everyone”. The coalition of parties led by Meloni won 44% of the vote. Strange as it may seem, a strong Meloni government may be a good thing for Italy and its international partners, says Foreign Affairs. Meloni has been shedding her formerly populist image, “presenting herself as something more like a traditional conservative”, and her…

At the rate French investors are moving into the UK, Eurostar will soon have to increase the number of its trains between London and Paris. Last week, Schneider Electrical agreed to buy Cambridge-based industrial software company Aveva, one of the few technology companies left in the FTSE, for £9.5bn. It remains to be seen whether the deal completes, as a number of its largest shareholders want to hold out for more money. But if it does, it will be just one of a whole series of French moves into the British market. Xavier Niel snapped up a 2.5% stake in Vodafone, and may well buy more in an attempt to shake up a mobile telecoms giant that has been underperforming for years. His rival Patrick Drahi has already bought 18%…

When governments or large companies want to borrow money, they can do so by issuing bonds to investors. Sovereign bonds are issued by governments, while one from a company is a corporate bond. The bond issuer receives a loan from the bond investors on which it must pay interest at set intervals – typically annually or semi-annually. The annual rate of interest is known as the coupon. This is normally fixed for the life of the bond, and so the bond market is also known as the fixed-income market. The amount borrowed – known as the principal – must usually be repaid on a specified date (the maturity date). Bonds are typically tradeable instruments, so the investors can then sell them on to other people. A bond is issued with…

“My worst business decision — being paid £5 for an hour’s modelling work to shoot a photo that appeared on Lux soap. My picture was used on the wrapping for years on bars of soap all over the world – I even came across a bar with my picture on it at Khartoum airport in the 1970s, yet I never got paid a penny more.” Novelist and former model Sandra Howard, quoted in The Sunday Times “My handmade Bonnet stove cost £130,000. It was always a dream to have a ‘French island’, as they call it. I went to France, helped design it, and in 2005 they craned it into the restaurant. [I]t hasn’t been a bad investment: we use it every day.” TV chef Daniel Clifford on his greatest…

aier.org Sarah Jaffe, author of Work Won’t Love You Back, says that “devotion to our jobs keeps us exploited, exhausted and alone”, and blames capitalism for our “workplace woes” and for robbing our lives of meaning and purpose. That’s an extreme charge to lay at the feet of organisations that provide work that people voluntarily apply for and can leave at any time, says Kimberlee Josephson. Perhaps it doesn’t feel voluntary when opportunities are lacking or alternatives are unattractive, but “something is better than nothing”, and globally firms provide better opportunities than the alternatives. A job is more often a means for making a living than about finding one’s passion or living the dream. To that end, the old advice to “learn a trade” remains a good one. Contra Jaffe,…

One technology investment trust that Lucy Coutts of JM Finn & Co recommends is the Herald Investment Trust (LSE: HRI). Run by veteran tech investor Katie Potts, it focuses on smaller quoted companies in the areas of telecommunications, multimedia and technology. Nearly half the holdings are based in the UK, compared with just 24% in North America. The largest holdings include Next Fifteen Communications and GB Group. While the fund has had a “torrid time” of late, Coutts thinks that it offers “great value” given its large discount to net asset value (NAV) and long record of beating both the FTSE and the Nasdaq indices. Another trust Coutts likes is Chrysalis Investments (LSE: CHRY), which invests in a large number of private companies in the UK and Europe. These include…

It’s been a disappointing two years for investors in Japan despite valuations being demonstrably cheap. The Topix index rose just 1.9% in sterling in 2021 and has fallen 7.3% in the year to date. Returns in yen were better, but the yen fell 10.8% last year and a further 5.3% in the year to date. Yet inflation in Japan is below 3% and ten-year bond yields are just 0.25%. The last 18 months don’t follow a period of stellar returns – over the previous three years, the Topix returned only 14% in sterling. No wonder the bulls of Japan have gone quiet and global investors have lost interest: the average allocation of global investment trusts is around 4%. The better-known specialist trusts managed by Baillie Gifford, Fidelity and JPMorgan are…

Last week Chancellor Kwasi Kwarteng announced a package of tax cuts aimed at getting the economy going. So what does it all mean for your finances? The big news is that income tax is being cut. From next April, the basic rate of income tax will fall from 20% to 19%. According to the government this will mean 31 million people will save £170 a year on tax. On top of this the 45% additional rate of income tax will be abolished in April 2023. It is paid by anyone earning more than £150,000 a year. Getting rid of it will save someone with an annual salary of £200,000 almost £3,000 a year. The Chancellor also announced that the 1.25% rise in National Insurance due to take effect in November…

Amid last week’s mini-budget tax giveaways, one tax was notable by its omission. The new chancellor has left inheritance tax (IHT) untouched, despite calls from some campaigners to get rid of the levy altogether. Meanwhile, Britons continue to pay more. HM Revenue & Customs banked inheritance-tax receipts of £2.9bn in the first quarter of the 2022/2023 financial year alone, 11% more than in the same period 12 months previously. As house prices continue to climb higher, accountants expect more and more people to become caught in the IHT net, even after concessions that effectively give you a £500,000 allowance – rather than the usual £325,000 – if your estate also includes your house. However, pension plans remain an excellent way to plan for IHT. All cash tied up in your…

WANdisco (Aim: WAND) has seen its shares soar after signing its “largest-ever contract”, says AJ Bell: a deal with an unnamed customer worth $25m. Demand for the company’s cloud-computing and data-management services is on the rise. The advent of the “internet of things” and 5G mobile-network technology has led to a huge increase in the amount of data needing to be processed. The company experienced record bookings of $27.3m for the six months to June, up from just $2.1m in the same period of 2021. WANdisco’s share price has risen by 64% in the last year.…

Jérôme Kerviel was born in Pont-L’Abbé, France, in 1977 and, after graduating with a degree in finance from the university of Nantes and a masters from Lumière university, took a “middle office” job in compliance with French bank Société Générale . He was later promoted into the front office, and then into a senior trading role in 2005. What was the trade? Kerviel’s job was to trade options and warrants (financial instruments that entitle but do not oblige an investor to buy an asset at a certain fixed price in the future) linked to two main stock indices, the German Dax and the Euro STOXX 50. The idea was to hedge the positions he took in these by taking opposite positions in similar assets, such that the overall portfolio would…

2022 SPOKE, Awatere Valley Sauvignon Blanc, Marlborough, New Zealand £13.95 – all four wines this week are from red-white.co.uk This week, I will not kick off with my featured wine. It is simply thrilling quality and mind-boggling value for money, but you will discover why this is an unmissable treat as you read on. Kiwi winemaker Ben Glover and English Master of Wine Liam Steevenson have collaborated on a series of incredible wines under the SPOKE label. The vineyard “spoke”, and they both listened. I tasted the range the other day; it is an absolute tour de force. The 2021 Resolute Sauvignon Blanc (£19.95) is a spectacular, mineral-driven, laser-sighted wine that will make even the most revered Loire Valley specialist sit up and take note. The 2021 Brink Sauvignon Blanc…

Putin His Life and Times Philip Short Bodley Head, £25 When he came to power, Russia’s president, Vladimir Putin, was virtually unknown outside his country. Yet within a few years he had acquired a reputation as someone who could lead Russia out of the chaos and corruption of the Yeltsin years and the legacy of seven decades of Soviet dictatorship. Two decades on and Putin’s invasion of Ukraine has made him one of the most reviled people in the world. The hope for the future of Russia as a great power is now reduced to flinging threats of nuclear apocalypse as Putin’s hopes of victory in the war slip away and his hold on power weakens. Given that, Philip Short’s biography paints a relatively sympathetic picture. Contrary to the image…

“Will the Dow go under 30,000?” asks a Barron’s headline. Well, yes, it probably will. It’s not rocket science. For the last 40 years, the Fed has been favouring investors with artificially low interest rates. Now, like a bad friend, it’s turned on them. The Fed is raising rates and putting the squeeze on the inflation it caused. But over the last 13 years investors, businesses and households all got very used to borrowing money at unnaturally low rates. They came to rely on it. Now, they must feel as though the Fed set them up then pulled the rug out from under them. Will 30,000 mark the bottom? Probably not. More likely, it will be closer to 20,000, because higher rates affect the economy as well as the stockmarket.…

£70,000 A bid made on auction site eBay for a wristband given to people queuing to see Queen Elizabeth II’s coffin. Online traders moved to cash in on memorabilia from the occasion, but eBay has removed dozens of such listings, saying they go against its policies. $71bn The wealth lost by Meta’s CEO Mark Zuckerberg since January this year. Much of Zuckerberg’s fortune is tied to shares in Facebook’s parent company, which have fallen following a backlash over the social-media channel’s rebranding efforts in the wake of numerous privacy scandals. The firm has also seen stagnating user growth as younger social-media users turn to apps such as TikTok. $250,000 The sum Google mistakenly sent to security expert Sam Curry for a job he never took on. Curry had previously worked…

US prosecutors have charged three men with orchestrating a bizarre market manipulation scheme involving a tiny delicatessen in the state of New Jersey, says NBC News. Your Hometown Deli was valued at more than $100m on the over-the-counter market last year, despite having annual sales of less than $40,000. Peter Coker Sr, Peter Coker Jr and James Patten are accused of convincing the deli’s owners to put it under the control of a firm called Hometown International, then carrying out a “calculated scheme” to gain control. They then allegedly traded shares in Hometown International and another firm, E-Waste, back and forth in order to create the illusion of trading activity and inflate their share prices: Hometown’s shares soared from $1 to a peak of $14. The stock later merged with…

Japan has intervened to support the yen for the first time since the Asian crisis of 1997-1998. A widening interest-rate gap with America has seen the Japanese currency lose 20% against the dollar this year. Japan spent ¥3.6trn ($25bn) on last week’s operation, which saw the central bank sell dollar reserves and buy yen, say Tetsushi Kajimoto and Leika Kihara on Reuters. The yen rose by 2.3% following the move, although it remains close to 24-year lows. The intervention came after the currency fell through ¥145 to the dollar last week, “an important psychological threshold” that pushed the government to try to stop a further slide, says Ben Dooley in The New York Times. Prime minister Fumio Kishida’s unpopular government is responding to “pressure to help those who lose out…

People across the rich world are “astonishingly downbeat”, says The Economist. After enjoying a reopening bounce during the summer of 2021, consumer confidence across the OECD club of developed economies has since crashed to levels lower than those seen in the global crisis of 2008-2009 and the first lockdown of 2020. Soaring inflation – which averages about 10% across the OECD – is the obvious culprit. “Economists dislike inflation; the general public despises it.” But other factors also seem to be at play. With governments turning off the stimulus taps, average disposable incomes are falling even before the ravages of inflation. Coming off Covid-19 handouts is delivering a painful comedown.…

Atlas Investissement, the investment vehicle of French telecoms billionaire Xavier Niel, has taken a 2.5% stake in Vodafone. Niel has been dubbed the “French Steve Jobs” after disrupting France’s tech and telecoms scene with his Iliad group, says Mark Sweney in The Guardian. He “shook up the French market with free internet access, subsequently developed into a hugely successful low-cost broadband and mobile model” that he has rolled out elsewhere in Europe. It is only seven months since Vodafone “rejected a €11.25bn offer for its Italian business from a consortium” backed by Niel, says Lex in the Financial Times. Now he may take “a second shot at Vodafone’s Italian assets”: Atlas has talked of “opportunities to accelerate… the streamlining of Vodafone’s footprint”. A disposal of Vodafone’s Italian business, where “revenue…

Electric-vehicle (EV) maker Zhejiang Leapmotor Technology is planning Hong Kong’s largest initial public offering (IPO) this year, says the Financial Times. Leapmotor aims to raise HK$8.1bn ($1bn) through the sale of 131 million shares priced between HK$48 and HK$62. The firm wants to capitalise on China’s fast-growing EV market, competing with the likes of BYD, otherwise known as “China’s Tesla”, and has secured $308m in pledges from the state-run Jinhua Industrial and Zhejiang Industrial funds. But the move comes amid a “lukewarm IPO market” in Hong Kong. Only two flotations have raised more than $1bn this year.…

● Britain’s big supermarkets – Tesco, Sainsbury, Asda and Morrisons – were supposed to have learned “the lessons of the financial crisis” when they “preserved margins at the expense of market share”, says Cat Rutter Pooley in the Financial Times. “This downturn, it’s meant to be all about keen pricing, not profits.” Yet last week, Aldi overtook Morrisons in market share. It and fellow hard discounter Lidl “have resumed ambitious expansion plans that were paused during the pandemic” – Aldi is opening a store every week. Debtburdened Asda and Morrisons may find it especially hard to respond. While Aldi and Lidl will not get near Tesco’s 27% market share (they still have under 10% each), they’ve changed market norms just as Ryanair and easyJet did for the likes of British…

Stephen Roach, senior fellow, Yale University The US economy will need a miracle to avoid a recession, says Stephen Roach, former chief economist of investment bank Morgan Stanley. “If you take Federal Reserve chair Jerome Powell at his word… he wants to move monetary policy to a restrictive stance” and that will bring much higher US unemployment, he tells CNBC. The real Fed funds rate (the difference between the central bank’s nominal target rate and the rate of inflation) needs to be at about 1% – ten percentage points higher than its low in March. While nominal rates have risen, the real rate is still deeply negative, at around -6.2%, so there’s a long way to go before this interest-rate cycle is over. While conditions won’t be nearly as severe…

unherd.com/thepost Biotechnology is “entering a new era”, says Mary Harrington. The US government recently assigned $2bn in funding for “high-risk, high-reward” biotech projects such as Crispr gene editing, artificial meat and mRNA technology. This is but the next step in a “fourth industrial revolution”, where a new paradigm of “health” is emerging – one where humans are seen as “a kind of meaty machine” whose functioning can be engineered to do better and where we depend on engineers to “keep supplying us with new and better upgrades”. The US has reassuring words for those worried about this, but the reality is that these technologies will be open from the outset to commercial exploitation, and we have already seen how slippery the slope to our “transhuman” future is when we consider…

American department store operator Kohl’s is facing pressure from activist investor Ancora Holdings to replace its chief executive and its chairman, says CNBC. Current CEO Michelle Gass took over in 2018 with plans that included expanding the presence of makeup retailer Sephora in Kohl’s store – a move praised by Ancora. However, the activist said that under Peter Boneparth, who became chairman in 2008, Gass was “no longer well-positioned to lead”. Ancora previously tried to “seize control of Kohl’s board” alongside Macellum Advisors in 2021, pushing for new directors, lower inventory and the sale of Kohl’s real estate, but settled for adding three new directors to the board. Kohl’s shares are down around 43% so far this year.…

● “I have a confession to make. A terrible one for a financial journalist. I have not moved my cash savings for years,” says Rachel Rickard Straus in The Mail on Sunday. Why not? Because for years the difference between the best and worst accounts “was a few pence”. But now thanks to rising interest rates there are accounts paying 4% for the first time in a decade. “Now... I’m switching.” SmartSave pays 4.02% and Zopa 4.01% on two-year, fixed-rate accounts. ● Treat so-called easy-access accounts with caution: “Fewer than half of the top easy-access savings accounts on the market” truly live up to their name, says Imogen Tew in The Times. Of the 50 easy-access accounts paying the best interest on balances of £5,000, 19 had a limit on…

● Some 500,000 older people will pay more income tax next year because of a combination of frozen income-tax thresholds and a rise in the state pension. Accountants note that the state pension is likely to increase by around 10% from next April, given where inflation stands. Meanwhile, income tax allowances – how much income you may receive before paying tax on it, or before you move into a higher tax bracket – are frozen until 2024/2025. The higher state benefit will therefore drag more people into the income-tax net. ● Annuity rates have hit a ten-year high and could be set for a further boost. The rate on an annuity determines what savers will receive when they convert their pension fund into a guaranteed, regular income through an insurer.…

Soft drink and mixer maker Fevertree Drinks (Aim: FEVR) has seen its share price crash following several profit downgrades this year, says the Financial Times. Higher packaging costs, staff shortages and transport problems caused a 30% year-on-year slump in first-half pre-tax profits to £17.6m, despite a 14% increase in revenue to £161m. The company expects earnings to fall by 12% this year. Fevertree believes its transport problems will prove transitory, but this prediction doesn’t seem to have cheered investors up much. The stock has slipped by 59% in 12 months.…

China After Mao The Rise of a Superpower Frank Dikötter Bloomsbury Publishing, £25 Until recently it was assumed that the “four decades of spectacular economic growth” in China since the departure of Mao Zedong would continue, meaning that China would “inevitably overtake the US to become the world’s biggest economy”, says Isabel Hilton in The Guardian. This idea “is not yet dead”, but it “seems less robust than it did”.China’s economy is performing poorly and “beset by profound long-term problems that include demographics, debt and a deflating property sector”. This makes historian Frank Dikötter’s China After Mao: the Rise of a Superpower, which takes a sceptical look at the policies of those who followed Asia’s most notorious dictator, timely. Using a “daunting array of statistics and documents” and drawing…

Last week’s mini-budget (see pages 12 and 24) unleashed days of financial turmoil for UK assets. On Monday the pound plunged to a record low against the dollar at $1.035. It has lost 21% against the greenback and 6% against the euro since 1 January. Government borrowing costs have soared, with the ten-year gilt yields topping 4.5% for the first time since 2008 as prices fell. The budget propelled 30-year gilt yields from 3.6% to 5.1%. That posed a threat to financial stability. As Capital Economics points out, it forced pension funds “to sell assets into a falling market to meet cash collateral requirements”. This risked a vicious cycle. The Bank of England therefore intervened in the bond market on Wednesday, buying long-dated gilts to restore calm. “Nothing in gilt…

Consumer-goods giant Unilever has announced that CEO Alan Jope will retire at the end of next year. Jope, who only took over in 2019, has been under pressure since he made a failed £50bn bid for GSK’s consumer healthcare division in January. The division later floated as Haleon. Investors were right to question the £50bn offer for Haleon, whose value has since fallen to £36bn, says Lex in the Financial Times. While Unilever’s shares have recovered from that debacle, “confidence in the [CEO] has not”. Jope was also “hamstrung” by a promise made by predecessor Paul Polman to deliver operating margins of 20%. That undertaking came after Unilever fended off a $143bn takeover bid from Kraft Heinz in 2017, which raised questions about Unilever’s profitability. The target has prevented Jope…

Three to buy JD Sports The Times Rising operating costs, higher inflation and faltering consumption have dented confidence in retailers. Despite positive first-half results for the six months to 30 July, the market wiped 8% off JD Sports’ shares, leaving them at their cheapest valuation in nine years. And “tailwinds to profit growth... should materialise in the second half”. Supply shortages are easing and organic sales in North America are growing again. Wholesale deals with Nike and Adidas “give it an edge over rivals”. Given the medium-term growth potential this looks a good time to buy in. 103p Ricardo Investors’ Chronicle Engineering and consultancy group Ricardo makes a large proportion of its sales from services related to the fossil-fuel industry. But it “can justifiably be considered an environmental, social and…

The most interesting part of any crisis isn’t the blow-up that you expected – it’s the one you didn’t see coming. The latest development in Britain’s plan to turn itself into an especially chaotic emerging market is that the Bank of England has been forced to intervene in the bond market to prevent the sell-off in long bonds from creating a disaster for pension funds (see page 4). Yields on 30-year gilts soared from 3.5% last week to 5% this week, as markets digested the likelihood of more bonds being issued, the prospect of higher interest rates and the way that UK economic policy was looking a bit Marxiste, tendance Groucho. This is a gigantic move in bond terms, to put it mildly, and one that caused no small amount…

The age of bail-outs for everyone Editorial The Economist The winter of 1973-1974 was “grim”, says The Economist. Geopolitical strife sent energy prices soaring. The price of crude oil more than tripled. This fed an inflationary surge across the rich world. The response from governments was to tell voters to tighten belts. Today’s governments are in a similar pickle, but the response is somewhat different. Britain has allocated 6.5% of GDP in the next year to shield households and firms. Germany and France are spending about 3%. The US is doling out help too. This reflects a “profound change in how governments govern”. The conventional wisdom says we live in a neoliberal era where markets run riot. The reality is “bailouts for everyone”. It started in the financial crisis of…

conservativehome.com As prime minister Liz Truss unveils her tax-cutting, pro-growth agenda, expect to hear a lot more about “trickle-down economics”, says William Atkinson. The left charges that this is what the Tory agenda is – to cut taxes on the rich in the belief that some of it will “trickle down” to the rest of society, or at least that this is claimed in order to throw a “veil of compassion” over greed. The main trouble with “trickle-down economics”, however, is that nobody ever advocated it. It’s a straw man. As economist Thomas Sowell has put it, “no recognised economist of any school of thought has ever had any such theory or made any such proposal”. What conservative policymakers do argue is that reducing the tax burden spurs economic growth.…

■ Jupiter Asset Management is in early stage talks to sell its stake in UK app-based bank Starling at a price that “could imply an up to 40% drop in its valuation since April”, says the Financial Times. The new implied valuation is £1.5bn, down from the £2.5bn at which Starling was valued in a funding round five months ago, in which it raised £130.5m. Existing investors in Starling, such as Goldman Sachs, will have right of first refusal. Demand for the stake is high, unnamed sources told the FT, so buyers may yet offer a better price. Starling is the largest holding in the Jupiter UK Mid Cap fund, at 7.6% of assets, and the fund is partly looking to sell in order to avoid crossing the regulatory 10%…

For many savers, being able to take 25% of their savings as tax-free cash when they reach retirement is one of the main attractions of private pensions. But while there are many potential uses for this money – from paying off a mortgage to spending it on travel – you don’t have to take it all at once. And in today’s financial climate, it may make sense to opt for instalments instead. For one thing, money left in your pension fund can continue to be invested; given the current volatility of investment markets, leaving savings to benefit from a future recovery could prove astute. Equally, by taking your tax-free cash in instalments, rather than upfront, you can use it to supplement your pension income. This may be useful for younger…

Cape Wrath Capital is a specialist British fund manager focused on value stocks. We invest in between 20 and 25 equities ranging from small to large caps, targeting pockets of analytical and behavioural inefficiency in the form of capitulation events and narrative shifts. A capitulation event is a situation where existing investors are exiting a position for emotional rather than rational reasons, typically after significant share-price declines. When we look for narrative shifts, we’re identifying situations where the dominant story around a stock could change materially, providing a catalyst for rerating the shares to fair value. Floor specialist’s firm foundation Somero Enterprises (Aim: SOM) is a market leader in the manufacture and service of laser-screeding machines, which allow specialist contractors to lay very flat concrete floors at low cost. The…