Mundy: Why I do not trust ‘catalysts for change'

Often during meetings with clients and prospective clients I am encouraged to justify one or two of our holdings.

Typically, I aim to provide a description of the investment with a few thoughts detailing the stock’s many qualities, but clients more often than not tend to enquire what the catalyst will be to crystallise its value. I have written before on our distrust of catalysts; in summary we cannot find any which have a sufficiently impressive track record to be worth following. If someone wants to buy a stock badly enough then it is always possible to find a reason: new management, potential bid, forthcoming results, the implementation of a share buyback and so on. Once identified, the al...