First and foremost, we have to reiterate that international private equity businesses have spotted that UK listed equities are trading at substantial discounts and they are filling their boots! 2021 is already the biggest year for PE deals in the UK since 2007 and we are only just past the half-way marker. To cherry-pick just a few, Morrison’s, Asda, Meggitt, Ultra Electronics, Avast, Smiths Medical … have all been taken out this year. If these discounts persist, we are confident that there will be plenty more deals to come in UK markets.

Speaking of which, we took the opportunity of share price weakness in FTSE 100 stalwarts Smith & Nephew and Unilever to add to our longstanding investments in both businesses. Smith & Nephew shares are almost back to March 2020 lows now despite the fact that elective surgeries in their core US markets have recovered materially and shares are trading on notably lower multiples than their US-listed peers. Unilever shares have returned to 2017 levels, when they were last bid for by Kraft Heinz. We would not be surprised to see someone take a shot at one of these big trophies again.

During July we were active in continuing to build our new position in animal genetics business Genus, as well as adding to Fevertree and RWS on share price weakness. We felt that the sell-off in Fevertree shares after their recent report was a classic case of markets over worrying the short term (increased costs in this case) and forgetting that this is a multi-year growth story, based on the global expansion of what began as a premium UK brand. Fevertree have been growing from a small base in the USA, but still have only a tiny foothold in this enormous market for spirits (and so mixers…). On a 10-year view we expect Fevertree to make the majority of its sales in the US and, you never know, they might just manage to crack China.

Our top ten holdings remain unchanged on the months. Croda deserves particular mention in July, reporting 27% organic sales growth in the first half of 2021. Croda’s primary business has always been making the active ingredients for premium cosmetics, but Steve Foots (CEO) and his team are quickly transforming the business into also having a leading life sciences arm. Croda won the contract for supplying the delivery system for the Pfizer vaccine that has made the division go gangbusters. Not bad for a company that started as sheep farmers in Yorkshire.