June roundup

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Mitchell Fraser-Jones 3 July 2018 Est. reading: 8 min read

June Roundup

Mitchell Fraser-Jones
3 July 2018

“Tighter liquidity, pain in emerging markets, slowing growth in China, vanishing momentum in the eurozone economy, failure of the US economy to accelerate, along with the continued resilience of the UK economy – all of this points to a stock market which cannot deny fundamentals for much longer.”

– Neil Woodford

Global equity markets endured a volatile month in June, with continued trade tensions and weaker economic data at times weighing heavily on sentiment. Some of the world’s key economic regions, such as the eurozone economy and China, appear to be rapidly losing momentum, calling into question the benign environment upon which much of the market’s recent momentum has been based.

At the beginning of the year, we introduced the bigger picture section of our website to help explain the thinking behind Neil’s long-term investment strategy. We have regularly updated these pages to reflect Neil’s thoughts, along with the latest economic data that supports and reinforces Neil’s views. Below is a selection of this evidence, to summarise how events are playing out broadly in the direction we have anticipated.

To the outside world, it may appear that not much has changed. Certainly, equity market momentum has continued to favour a narrow band of stocks, seen as beneficiaries of a reflationary global growth scenario that we simply do not believe in. Nevertheless, our conviction has been further strengthened by the evolution of this fundamental macroeconomic data, which has gradually undermined consensus expectations.

Key company events

4 June: Immunocore – encouraging trial data

11/28 June: BCA Marketplace – bid approach & annual results

13/15 June: Stobart – Ryanair agreement & statement on board

19 June: Capita – disposal and contract win

22 June: Autolus – initial public offering

Woodford Patient Capital Investor Day 2018

Earlier in June, we held a Woodford Patient Capital investor day for professional investors, at which several of the portfolio’s holdings presented. Video content will be available in the coming weeks and here’s a taster.

Subscribe to the Woodford YouTube channel to be notified when they are avaialable…

Conclusion

At the macroeconomic level, much of what we have seen in the first half of 2018 is supportive of our over-arching investment strategy. Financial markets, however, have not reacted to these fundamental developments in the way we had expected. Market momentum has occasionally wavered but has remained a powerful force in markets so far this year. As a result, our investment strategy has not yet been rewarded but we are absolutely confident that it ultimately will be.

Meanwhile, positive developments in some of the earlier-stage businesses that we have been nurturing, points to the long-term potential that exists elsewhere within the portfolio. Autolus is the first of several successful IPOs that we anticipate in the months and years ahead.

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Have your say

At Woodford, it’s important to us that investors understand how their investments are being managed and we are committed to making sure you feel well informed.

Our monthly round-ups are an important element of our communications programme and we’d love to get your thoughts on the new content and format. Please take a few moments to answer the following questions – your feedback is important to us and we appreciate your time.

Have your say

At Woodford, it’s important to us that investors understand how their investments are being managed and we are committed to making sure you feel well informed.

Our monthly round-ups are an important element of our communications programme and we’d love to get your thoughts on the new content and format. Please take a few moments to answer the following questions – your feedback is important to us and we appreciate your time.

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