After a rough start to the year in January with rising interest rates and inflation, February has taken on a new and truly appalling dimension.

Global markets (and ourselves) did not expect a full-scale invasion of Ukraine, believing that Putin was aiming instead to create enough tension to gain concessions. President Putin’s actions and rhetoric have caused untold misery to millions in Ukraine and will have bought severe consequences to his own people. Our thoughts are with all those in Ukraine and with family there.

Already jittery 2022 markets felt at times towards the end of February like they had moved into full panic mode. Since Putin’s invasion on 24th February, the FTSE 100 has fallen by more than 2.5% in three of the nine trading days, volatility not seen since the worst of the COVID sell-off in 2020. The volatility has been mind-boggling at a stock specific level, to pick just a few examples:

  • ITV (not a company that we invest in) shares fell 27% last Thursday when they announced that they would be launching a new streaming platform.
  • BP (also not one we own) shares fell a mere 4% on the day they announced the $25bn impairment of their Russia assets (by our numbers that would have been closer to $50bn without the Rouble devaluation)
  • Greggs (we proudly own this one): shares fell 10% at the open when management dared to be honest about the 6-7% input cost inflation that they expect in 2022.

One can probably tell from our tone that we do not believe that markets are acting rationally at present, which is quite understandable given the macro uncertainty. However, as active managers, it is our role to step forward in these moments and to act with prudence and conviction. Margaret Thatcher famously stated:

              ‘I am not a consensus politician. I'm a conviction politician’ – Margaret Thatcher, 1979

These are markets for us to be conviction investors on behalf of our clients and to put their savings to work as and when opportunities arise. During February we continued to add to our investments in core quality names Halma, Spirax-Sarco and Croda as we see the sell-off in their shares as being unjustified and presenting a rare chance to increase our positions in these best-in-class British businesses. Also in the Industrials sector, we initiated a new position in Ashtead Group, the predominantly US-focused equipment hire business. The next time that you want to rent a hydraulic ram, you know where to look. We have followed Ashtead for a number of years, waiting for an attractive entry point – the market sell-off gave us this.

At the smaller end of the spectrum, we added to Fevertree Drinks (who need no introduction) and Keywords Studios, who are a one-stop-shop for outsourced video game development. Both are high growth, high quality businesses that we have been steadily adding to over recent months.

These purchases were predominantly made from existing cash reserves, however we also raised proceeds via the sale of Hargreaves Lansdown. Hargreaves had been underperforming recently and we could not shake the feeling that they had systems issues. Entirely by luck not skill, we managed to exit our position two days before a profit warning based on those system issues. One we were happy to avoid.


The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article.

Please also note the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.

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