Fiducia Wealth Management
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With the financial marketplace experiencing such unprecedented upheaval, our Investment Committee is working continuously to adapt our portfolios to accommodate and protect against the global fluctuations and challenges presented by Covid-19.

Like our own Investment Committee, the Portfolio Managers of the funds we invest into are having to address, adapt and evolve throughout this period too.

We recently caught up with Mark Slater of Slater Investments in a Fund Manager Q&A – a series we’re running to enable us to provide our readers with insights into the strategies some of the managers within our portfolios deploy.

Who is Mark Slater?

Mark Slater co-founded Slater Investments in 1994 with Ralph Baber.

Mark is currently the Chairman and Chief Investment Officer of Slater Investments, Chairing the Investment Committee. Mark has received top ratings from several well-known rating agencies.

Prior to founding Slater Investments, Mark worked as a financial journalist with Analyst plc and the Investor’s Chronicle. In 1992, Mark helped research and edit a best-selling investment book “The Zulu Principle” for his father, Jim Slater, which focuses on identifying small to medium-sized growth companies.

During his career, Mark has served on the boards of four public companies in which he has been a substantial shareholder. Mark also has an MA in History from Cambridge University.

So let’s take a look at Mark’s answers to our questions…

Fund Manager Q&A:

What is the investment philosophy of the fund?

Some of Slater Investments’ defining beliefs are:

  • The stock market regularly misprices shares
  • Most sensible criteria work, if consistently applied
  • Some combinations of criteria work better than others
  • A margin of safety is crucial, which is achieved by having a low PEG (Price/Earnings to Growth)
  • Need discipline, a temperamental fit and intellectual conviction
  • Long-term approach

Our key beliefs have led to a formulation of our firm’s investment philosophy. Slater Investments believes that investing in growth shares using value filters provides the optimal combination of risk and reward in the long term, particularly when combined with focus, discipline, intellectual rigor and a healthy dose of common sense.

 

Did the fund strategy change during the C19 pandemic and if so, how?

The strategy did not change. The Fund’s primary investment strategy is to have core holdings of companies that can grow their earnings reliably and are priced cheaply. This builds in a margin of safety. Dislocation in the stock market occasionally creates several opportunities for profitable investments using a number of secondary strategies. These include companies with the following characteristics:

  • Discount to net asset value
  • Low Price/Sales
  • High yield
  • Discount to net cash
  • A portion of the portfolio will be invested in such alternative strategies so long as a significant margin of safety can be built into each share selection.

 How has the C19 pandemic impacted the way in which you operate?

We had robust policies in place and transitioned to a completely remote work environment quite seamlessly. We continued business as usual with the only change being all meetings were held remotely.

 

Would you say the number of companies trading below earnings has increased through the C19 pandemic?

During the pandemic we took the view that businesses that generated consistently good returns on capital before the crisis were likely to perform well afterwards. The uncertainties of the virus and lockdown, however, made it exceptionally hard to predict the near term, so we found it more productive to assess the situation three years into the future. It was tempting to buy heavily at that stage because everything looked ‘cheap’. However, we were careful to balance risk and reward and initially focused on adding to high conviction holdings.

What do you see as the future for investing in companies with low price-to-earnings ratios in relation to their earnings growth and strong cash flows and financial positions? Are we likely to see more companies potentially fail?

Returns on capital vary from year to year thanks to the ups and downs of financial conditions, particularly monetary conditions. But these good and bad years tend to even out as time passes.  Our focus remains on the underlying operating performance of the businesses we own.  If they continue to deliver operationally then we expect their share prices to appreciate meaningfully over the medium term.

 

On behalf of all the team here at Fiducia, our clients and anyone else reading this Q&A, thank you Mark, for taking the time to join us ‘Under the Spotlight’ and answering our questions.

At Fiducia we are continuously looking to deliver outstanding value and expertise to our clients, if you have any questions regarding your investment portfolio please do not hesitate to speak to a member of our team. We are a multi award-winning Chartered Financial Adviser based in Colchester, Essex. Our advisers will ensure you have the right investments to help you meet your financial goals, in a tax efficient way that works for you. 

Important Information

Slater Investments Limited does not offer investment advice or make any recommendations regarding the suitability of its products. No information contained in this article should be construed as advice. Slater Investments is authorised and regulated by the Financial Conduct Authority, registration number 165999. Registered Office: Nicholas House, 3 Laurence Pountney Hill, London, EC4R 0EU, Company Registration Number 2863882.

Fiducia Wealth Management

If you would like to know more about how we as Financial Advisers can help you  with your Investments then visit the Investment Management section of  our website: Investment Management or send us email at: email@fiduciawealth.co.uk

The information contained in our website is for guidance only and does not constitute advice which should be sought before taking any action. The information is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly, no responsibility can be assumed by Fiducia Wealth Management Limited, or any associated companies or persons, its officers or its employees, for any loss occurred in connection with the content hereof and any such action. Professional financial advice is recommended for every case.

Fiducia is a multi award-winning firm of Financial Advisers based in Dedham near Colchester situated in the heart of Constable Country on the Essex Suffolk border. www.fiduciawealth.co.uk

Fiducia Wealth Management Ltd. Dedham Hall Business Centre, Brook Street, Dedham, Colchester, Essex, CO7 6AD.

Fiducia Wealth Management Ltd. is authorised and regulated by the Financial Conduct Authority. FCA No. 408210