5. Consolidate your convictions
Elevated levels of volatility warrant a degree of caution. Going into the Covid-induced crisis, our capital reserves were higher than usual, and we have not rushed to deploy cash too quickly.
Instead, now is a good time to consolidate positions in high conviction investments.
In companies where the dividend is secure and will be paid in the near term, committing further capital can lock in returns and contribute to annual income targets.
Elsewhere, fallen valuations can provide a timely opportunity to purchase bigger stakes in fundamentally sound businesses.
In the leisure sector, which have seen revenues fall to zero in the short term as a result of lockdown measures, we participated in several recapitalisation deals to help businesses survive and emerge stronger from the crisis.
Low-ticket experiential leisure remains attractive over the longer term, as it is less exposed to consumer belt tightening than some other areas of spending.
As such, we recently backed a fundraising by Ten Entertainment Group, which owns the Tenpin bowling alley chain, that should emerge from the crisis as a long-term winner in its niche market.