Malcolm Schembri: Long may the inflation debate continue!

In an update to Investors in March, Garraway Global Equity Fund’s Manager, Malcolm Schembri, identified a number of stocks that he felt were trading at a discount to fair value estimates and noted that he was buying into that weakness. He has recently issued the following update for investors, highlighting returns achieved since additions were made to favoured holdings.

Dear Investors

Over the past three months, Garraway Global Equity Fund Class C GBP shares returned 13.01%, outpacing the 7.75% return of the MSCI World and the 6.63% peer group average return.

Largely behind these returns have been a number of compelling opportunities we identified due to the inflation fears which preoccupied investors.

As investor sentiment ebbs and flows between growth and value, it is of utmost importance to keep a disciplined long-term perspective and stick to the fundamentals.

By having a detailed understanding of the businesses intrinsic value, we have been able to filter the noise and act decisively. It is unwise to try and time the market, investors are best served by capitalising on opportunities as and when the market presents them.

As highlighted in the March Investor letter, Roper Technologies was identified as a buying opportunity. We had aggressively added to the name. Since then, the shares have rebounded strongly and are up nearly 22%.

Yet Roper Technologies was not the only name we mentioned. We were particularly vocal about a number of tech-oriented business. As can be seen from the table below, all these companies have all beaten the market decisively, having gained nearly 21% on average compared to the S&P500 and Nasdaq’s just over 9% return.

Value Value Total Return Performance
(as at 12/03/2021) (as at 30/06/21) 12/03/2021 - 30/06/21
Microsoft $235.75 $270.90 15.17%
Amazon $3,089.49 $3,440.16 11.35%
Facebook $268.40 $347.71 29.55%
Adobe $444.30 $585.64 31.81%
Veeva Systems $257.77 $310.95 20.63%
CRM $212.21 $244.27 15.11%
Average 20.60%
Roper Technologies $386.37 $470.20 21.45%
S&P500 3,943.34 4,297.50 9.42%
Nasdaq 13,319.86 14,503.95 9.11%

As it has been said, the market is inefficient enough to create opportunities and efficient enough to realise such opportunities.

Long may the inflation debate continue!

Malcolm Schembri
Fund Manager
Garraway Global Equity Fund