195. Why the UK government will find it difficult to resist calls for a windfall tax

Simon Brazier, manager of Ninety One UK Alpha, discusses the outlook for the UK economy and the companies he thinks will do best in the current environment. As consumers look to rein in spending, he is repositioning towards companies with cheaper offerings such as Ryanair and JD Weatherspoon, but says he still prefers large caps over small caps. Simon also discusses the potential windfall tax on oil and gas companies, explains how currency risk can be mitigated, and says he thinks supply chain disruption could be here for some time to come.
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The team behind Ninety One UK Alpha believes that markets are excessively focused on short term factors and that most analysts typically concentrate on the next set of results and not where a company will be in five years’ time. This creates opportunities to invest in quality companies that will deliver for many years into the future. The team only buys companies that are adding value for shareholders by allocating capital efficiently. Consequently, investing in proven company management is very important. Cash flow generation is also key.

What’s covered in this episode:

  • What the characteristics are of ‘quality’ companies
  • The manager’s view on the outlook for the UK economy
  • Which companies can continue to grow in a low growth world
  • Why the manager likes pubs and airlines today
  • The companies that could benefit from people looking to spend less
  • If a windfall tax on oil companies is likely to happen
  • Whether small or larger companies look more attractive
  • Why the manager sold overseas stocks in favour of UK companies
  • If foreign investors are buying UK stocks again
  • If investors should worry about currency risk
  • Whether supply chain disruption will ease soon
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