Mark Slater's picks at the 2015 UK Investor Show

Monday, Apr 20 2015 by
48
Mark Slaters picks at the 2015 UK Investor Show

It was an exceptionally busy day for the Stockopedia team at this year's UK Investor Show. But happily I managed to duck out of duties on the stand for a short time to listen to Mark Slater's presentation. Slater is chief investment officer at Slater Investments and ranked as one of the best performing fund managers in the UK, with funds including the MFM Slater Growth and MFM Slater Income. As Paul mentioned in his blog, Slater is a source of a huge amount of investing common sense, so it was no surprise that his presentation was packed out. Here is some of what he had to say…

New and existing concerns

Tackling the macro view, Slater picked up on a number of concerns he highlighted a year ago, but continue to persist.

  • We have still got distortions from the effects of quantitative easing in the market.
  • There hasn't been a market correction (of more than 10%) for some time, and that is still the case. Although he noted that there had been bigger pullbacks among small-cap and technology shares.
  • He said it was becoming increasingly difficult to find high quality growth companies, with most now trading at 20x earnings or more.

Among his more recent concerns, he said that the pick-up in currency volatility was making life difficult for both investors and companies. For the most part, he noted, the market is being grown up about this, with companies prepared to report on an actual and constant currency basis. However, it does make life complicated. He also mentioned the fact that the Eurozone has joined the “QE party", which elevates risk because if additional challenges emerge [a possible reference to Greece], it's difficult to see what the solution would be.

Ideal conditions for investors

Having acknowledged the present concerns, Slater said that conditions for equity investing are ideal, with the current 'cheap money' environment likely to continue for “a long time". He said that there was less certainty that rates will go up, likewise in the US, “because the world doesn't work otherwise". In addition, he noted:

  • The yield on equities is still attractive versus bonds.
  • The bear case, which includes factors like ISIS and the Middle East, is well rehearsed and is therefore priced-in.
  • There are pockets of exuberance but most investors are looking over their shoulder a bit (which is a good thing).

Slater said that the risks of being out of the market are…

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As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested. ?>


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Hutchison China MediTech Limited (Chi-Med) is a China-based, globally-focused healthcare group. The Company researches, develops, manufactures and sells pharmaceuticals and health-related consumer products. Its Innovation Platform focuses on discovering and developing therapeutics in oncology and autoimmune diseases for the global market. Its Commercial Platform manufactures markets and distributes prescription drugs and consumer health products in China. more »

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340p
Change
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Mkt Cap (£m)
2,373
P/E (fwd)
n/a
Yield (fwd)
n/a

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400p
Change
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Mkt Cap (£m)
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P/E (fwd)
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Yield (fwd)
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LSE Price
3030p
Change
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Mkt Cap (£m)
802.4
P/E (fwd)
33.0
Yield (fwd)
1.0



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4 Comments on this Article show/hide all

Andrew L 20th Apr '15 1 of 4

Ben,
Really useful and detailed summary of Mark's talk. One point my notes differ on was the valuation of the R&D section of Hutchinson China's business which is the key valuation driver. My notes say roughly as follows

R&D section of Hutchinson China - above you say that this could be worth US$400-US$500m. From my notes actually this is referring to what the market is currently valuing this part at. I.e. the market value of Hutchinson China minus the value of the property and the healthcare business.

Mark went onto to say that a base case valuation for this could be US$1-2bn at the lower end and US$5bn at the higher end. These are just my scribbled down notes but I think this is what he said. Obviously a fairly important point and maybe we can get a video of the talk.

Andrew

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Paul Scott 21st Apr '15 2 of 4

Hi Ben,

Really excellent review, thanks for posting - I was only able to attend about half of Mark Slater's talk, as I arrived slightly late, and then had to retire to the green room to get fixed up with a mic, etc, for the following session.

I compared my hastily scribbled notes from what I saw of Mark's talk, and it exactly coincided with your report.

However, I think you omitted one section, where Mark reviewed his prior year stock picks at the last 2 UK Investor Shows, which I thought was quite interesting, as he recapped on his views on old favourites like Restore (LON:RST) and an out of patent pharma company, forget its name, Allied something? He mentioned it every year.

Also, you picked up on his mentioning Marston's (LON:MARS) which is a stock I also like, but I was amazed that Mark didn't mention two key bull points for me with MARS, namely that it owns tons of freehold property, and also has long term interest rate caps on its borrowings - so best of both worlds probably, in the long run.

I am sure that Mark also mentioned Avation (LON:AVAP) positively, but can't remember what he said about it. I think it was just an aside.

Terrific write up though, thanks very much indeed for posting it.

Regards, Paul.

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Ramridge 21st Apr '15 3 of 4

Excellent write-up. Any plan of having the full recording available on say Audioboom?

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imranawan 21st Apr '15 4 of 4
1

In reply to post #97164

Not sure whether the recording will be made available on audioboom, but it may be well be uploaded to Youtube. Looking back at last years event, there are quite a few videos from the Investor show that have been uploaded to Youtube.

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Ben Hobson

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