Majedie's Record takes 'patient' approach to market uncertainty
Keeping faith with fintech stocks
Majedie's Tom Record, co-manager of the firm's Global Equity fund, is confident the team is able to deal with market uncertainty due to being "very patient" and investing in companies "with a long-term competitive advantage".
Last year, Record said the fund benefited from investing in a diverse range of independent stocks, helping it keep pace with the IA Global sector over the past year. As at 10 March, the $44m fund had returned 1.1% compared to the 1% return of the IA Global sector, FE fundinfo data shows.
One notable holding is Argentine e-commerce firm MercadoLibre, a 1.8% position that has been in the fund since launch, and which Record says has a proven payment solutions and logistics business.
"MercadoLibre is exciting because it is growing its finance and fintech business. It is offering loans to individuals and the fintech side could be multiples of the size of the e-commerce business," Record said.
It is starting to be recognised by the market and PayPal joined as a strategic investor in the firm last year."
"MercadoLibre was a well-positioned company in an immature market that was relatively volatile. We used the volatility to our advantage and added at times of weakness.
"We have experienced a return over five years that is double the 300% stock return we would have achieved if we had just bought and held the stock."
Conversely, Japanese telecoms firm SoftBank detracted from the fund's performance, Record admitted, due to its exposure to office space rental company WeWork, which hit the headlines last year due to corporate governance issues.
"WeWork's IPO was pulled and there is an awful lot of pessimism in the price because of that," Record explained.
"However, Alibaba - of which SoftBank is the largest shareholder - performed very well last year, he added, having seen $12bn in sales in the first half an hour of shopping event Singles Day on 11 November.
"If we look at where the value within the company lies, which is mostly Alibaba, and compare it to where the market's narrative is fixated, namely on WeWork, we see a widening gap which is reflected in the huge discount to fair value that Softbank trades at," added Record.
A recent purchase in the fund is medical device company Ambu, a "leading player in single-use endoscopes".
Record predicts the single-use endoscope market will grow quickly in the next five to ten years despite Ambu having issues with a duodenoscope not working in the summer of 2019, which led to shares halving, prompting the fund manager to buy in.
The fund, which Record co-manages with Adrian Brass and Tom Morris, targets a total return in excess of the MSCI All Country World index over the long term by investing in a diverse range of global equities on a three-to-five-year time horizon.
It currently has 96 holdings and a cash weighting of 1.5%.
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