Latest / Merryn Talks Money / The bad news may soon be over for UK small caps

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The bad news may soon be over for UK small caps · Merryn Talks Money

• 0:00
  Speaker 1: John, Welcome back, Happy New Year. Happy New Year to
• 0:03
  Speaker 1: you too. Did you have a nice Christmas? I told
• 0:06
  Speaker 1: you not to ask me that my and my family
• 0:11
  Speaker 1: is singlehandedly responsible for NHS waiting list at the moment,
• 0:15
  Speaker 1: as listeners can probably hear in my voice, let's just
• 0:19
  Speaker 1: start right in on NHS. But just go no, no,
• 0:22
  Speaker 1: let's not Parkard. Let's go straight in there on the NHS.
• 0:25
  Speaker 1: Now we are talking just after Rushie Soona came out
• 0:28
  Speaker 1: with his five promises or as we shall swallom in future,
• 0:32
  Speaker 1: five vague and pointless promises. And when she told us
• 0:36
  Speaker 1: that he would promise to do some of the things
• 0:38
  Speaker 1: that I think personally as a voter or and taxpayer,
• 0:41
  Speaker 1: I kind of assumed he was going to do anyway, Yes,
• 0:44
  Speaker 1: the sort of thing you can we take for granted.
• 0:47
  Speaker 1: It's like coming back and seeing I think, I think
• 0:49
  Speaker 1: my eam is to have a functional society again. I mean,
• 0:53
  Speaker 1: I think you know that's that's you know, that's that's
• 0:55
  Speaker 1: not you. You're not going to sit in the bar
• 0:56
  Speaker 1: very high us. You really not have was it the
• 1:00
  Speaker 1: the tax takes we're appatuning the GDP though it's I
• 1:05
  Speaker 1: think under the current forecast it heads up to nearly
• 1:07
  Speaker 1: thirty percent, which I'm not sure it will ever reach.
• 1:11
  Speaker 1: I mean, we've talked about this before, John, but we've
• 1:13
  Speaker 1: looked at the percentage of GDP that each country can
• 1:18
  Speaker 1: peek out at as a tax take, right, and the
• 1:21
  Speaker 1: UK very rarely gets to forty and we don't like it.
• 1:24
  Speaker 1: We won't pay that much as a society. So as
• 1:27
  Speaker 1: we start hitting forty percent, we start fiddling around with
• 1:29
  Speaker 1: our taxes, we start working less, We stop you know,
• 1:32
  Speaker 1: shifting shifting our income around the place, and you begin
• 1:35
  Speaker 1: to see the tax takes and peek out in the
• 1:37
  Speaker 1: high thirties. And other countries will go higher, you know,
• 1:40
  Speaker 1: the Scandinavian countries they're like, okay, we'll be at and
• 1:43
  Speaker 1: some of the other European countries will do it. But
• 1:45
  Speaker 1: in the UK it's almost impossible to get the tax
• 1:48
  Speaker 1: take up to the high thirties and keep it there
• 1:51
  Speaker 1: lettle and fourteen percent because we change our behavior and
• 1:53
  Speaker 1: it's just where they are. You can want it to
• 1:55
  Speaker 1: be different. I know a lot of people want it
• 1:57
  Speaker 1: to be different, but you can't make it different. Now speaking,
• 1:59
  Speaker 1: if you want to be different but can't make difference,
• 2:01
  Speaker 1: let's go back to Richie's and he's rather vague and
• 2:03
  Speaker 1: pointless inflation promise. He would like to promise us that
• 2:06
  Speaker 1: he's going to bring inflation down for all, I don't know,
• 2:08
  Speaker 1: ten eleven percent. What do you think he's after here?
• 2:10
  Speaker 1: Four or five something like that. Now that's the absolute
• 2:14
  Speaker 1: minimum minimum you could expect for the kind of thing
• 2:17
  Speaker 1: a prime minister would want to do in a country
• 2:19
  Speaker 1: like the UK. Right, But can you do it? Has
• 2:22
  Speaker 1: he got anything to do with him at all? No?
• 2:26
  Speaker 1: I mean it's probably his easiest promise to keep, because
• 2:29
  Speaker 1: either it's going to happen or it's not. And mathematically
• 2:31
  Speaker 1: it probably well go down here. I mean, even the
• 2:34
  Speaker 1: kind of beerish forecast was writing six percent is the
• 2:37
  Speaker 1: law next year, and lots of people are seeing White's
• 2:40
  Speaker 1: laud than that, so you'll probably had to be yeah,
• 2:42
  Speaker 1: it's gonna do him. It's barely getting to do with
• 2:44
  Speaker 1: the Bank of England. So as a promise, this is
• 2:46
  Speaker 1: the same as Riscie soon Make standing up and saying
• 2:49
  Speaker 1: I promise you that I will make sure that spring
• 2:51
  Speaker 1: arrives the Green Shirts, okay, and it's got nothing through
• 2:56
  Speaker 1: the Bank of England either. We've discussed this before. They
• 2:59
  Speaker 1: have ideas their powers that don't really exist. They can
• 3:02
  Speaker 1: raise interest rates as much as they like, but if
• 3:04
  Speaker 1: the old price went to two hundred dollars, wouldn't make
• 3:05
  Speaker 1: any different. Not for it's going to No probably not
• 3:09
  Speaker 1: not this year. Is that another one of your forecasts? No? No, no, no,
• 3:17
  Speaker 1: I'm not getting checked into that again. That's it. I've
• 3:20
  Speaker 1: still got to milk whose place one? For all this was? There?
• 3:23
  Speaker 1: You go prooflesseners. John learns I can trick and once
• 3:26
  Speaker 1: I can't trick him twice. Right, I have got our
• 3:29
  Speaker 1: guest coming up, And later in the podcast we do
• 3:32
  Speaker 1: talk about house prices and Anna McDonald fairly speaks as
• 3:36
  Speaker 1: though it's entirely reasonable to expect house prices to full
• 3:39
  Speaker 1: percent over the next year and for the banks to
• 3:41
  Speaker 1: be ready for that and prepared for that. So you know,
• 3:43
  Speaker 1: it's no longer an out their idea John, that house
• 3:46
  Speaker 1: prices will full thirty percent in normoral terms, So you
• 3:48
  Speaker 1: might have to up that forecast or down that forecast
• 3:50
  Speaker 1: depense you look at it, you want to get fifty.
• 3:53
  Speaker 1: It's not good. It's kind of like, you know, come
• 3:57
  Speaker 1: out with us, and suddenly everyone's copying me, I don't
• 4:00
  Speaker 1: I go higher or lower. I just want to like
• 4:02
  Speaker 1: point out that, yeah, you know, twenty normal terms just
• 4:05
  Speaker 1: takes us back to pandemic, early pandemic. But also it
• 4:09
  Speaker 1: was just I was fact I was rereading that paper
• 4:12
  Speaker 1: from the X Bank England chap Um from two thousand
• 4:17
  Speaker 1: nineteen where he talks about how real yields are the
• 4:19
  Speaker 1: important factor, and it's actually a line in there, but
• 4:22
  Speaker 1: he says that if real yields go from negative two percent,
• 4:25
  Speaker 1: which is where they were in two thousand, up to
• 4:28
  Speaker 1: zero percent, then house prices would follow by about thirty
• 4:31
  Speaker 1: one percent based on their model. Now real yields have
• 4:35
  Speaker 1: now going to zero percent and it looks like they're
• 4:38
  Speaker 1: just gonna stay there. Um. I mean I did talk
• 4:41
  Speaker 1: to David Miles briefly and he didn't go that far
• 4:44
  Speaker 1: this time around, but it's interesting just to know that.
• 4:46
  Speaker 1: So yes, it's it's quite a I think even if
• 4:50
  Speaker 1: the UK economy does better than lots of people expect
• 4:52
  Speaker 1: this year, and I actually think it will, Um, they
• 4:55
  Speaker 1: kind of we bust of trade and updates we've had
• 4:58
  Speaker 1: so far and make it look as if actually consumers
• 5:00
  Speaker 1: actually kept spending at Christmas, which makes sense because everyone
• 5:05
  Speaker 1: still get jobs, etcetera, etcetera. But even we're looking at
• 5:09
  Speaker 1: a wholesale replacing of asset markets. So the expensive icets
• 5:13
  Speaker 1: have got to come down because interest strates have gone up.
• 5:16
  Speaker 1: They starts straightforward, and UK properly falls into the category
• 5:20
  Speaker 1: of expensive usets. Thankfully, as I think you probably talk
• 5:24
  Speaker 1: about behind, UK shields don't fall into that category. They're
• 5:29
  Speaker 1: actually can cheap icets at the moment, so the interest
• 5:32
  Speaker 1: rate thing shouldn't actually cause them any major problems. It's interesting,
• 5:36
  Speaker 1: isn't it. I Mean, I agree with you that the
• 5:37
  Speaker 1: UK economy will probably do better than most people expect
• 5:39
  Speaker 1: this year, but that's largely because everyone expects it to
• 5:42
  Speaker 1: do it so incredibly badly, and the retail members etcetera.
• 5:45
  Speaker 1: Really haven't been that bad and I don't see the
• 5:47
  Speaker 1: major issues with consumer confidence yet. But one of the
• 5:49
  Speaker 1: things that you and I have written about over the
• 5:51
  Speaker 1: years and over and over and over is about how
• 5:55
  Speaker 1: GDP growth or decline is in no way correlated with
• 5:59
  Speaker 1: asset market returns. As a market returns are correlated to
• 6:02
  Speaker 1: interest rates, and they're correlated to the prices at which
• 6:05
  Speaker 1: they begin every year. Right, So the fact that the
• 6:08
  Speaker 1: UK economy, let's say it does do appallingly this year.
• 6:10
  Speaker 1: Let's see we say horrible performance from the UK economy,
• 6:13
  Speaker 1: It does not follow in any way that UK asset
• 6:17
  Speaker 1: prices would do badly as a result. I'm separating out
• 6:20
  Speaker 1: house prices here because the plumber goes an employment goes
• 6:23
  Speaker 1: to terms and lot of course house prices will full
• 6:25
  Speaker 1: further than you'd expect, But equities et cetera are not
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  Speaker 1: correlated to the performance of the UK economy. That could
• 6:31
  Speaker 1: correlated to price and if they're already cheap than how
• 6:35
  Speaker 1: the economy performs from here as almost by the buyer. Right. Yeah,
• 6:39
  Speaker 1: and also yeah, there's a lot of space for sentiment
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  Speaker 1: to change. Still just on the UK generally, we're still
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  Speaker 1: the hardest hip when it comes to outflows from funds
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  Speaker 1: for example, um and if you look at the Bank
• 6:51
  Speaker 1: of America, quibal find major end excepting minds, the UK
• 6:55
  Speaker 1: is down there is the most heated market. So you know,
• 6:58
  Speaker 1: I just think that it's why it loose can trade
• 7:00
  Speaker 1: in trades. That still has a massive amount of room
• 7:03
  Speaker 1: tom note whale. And that's that's despite the fact that
• 7:06
  Speaker 1: was basically the best performing developed market last year. Well
• 7:12
  Speaker 1: this could be this could be our year. Then you know,
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  Speaker 1: the money always goes to things that are going up,
• 7:17
  Speaker 1: not things that are going down, So maybe that'll suddenly
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  Speaker 1: appear in the UK this year. Anyway, John, it is
• 7:22
  Speaker 1: good to be back. Good to have you back. And
• 7:26
  Speaker 1: do you know, I don't know how to finish this
• 7:27
  Speaker 1: somewhere because I can't remember what happened next. Hello, and
• 7:34
  Speaker 1: welcome to Marin Talks Money, the podcast in which people
• 7:37
  Speaker 1: who know the markets explain the markets. I'm there in
• 7:40
  Speaker 1: some subweb with me. This week. Our guest is Anna McDonald,
• 7:44
  Speaker 1: fund manager at a Muti Global, specializing in UK equities
• 7:48
  Speaker 1: and in particular in smaller companies. Anna, welcome, Thank you
• 7:52
  Speaker 1: so much for joining us, Thank you for having me. Now, Anna,
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  Speaker 1: tell me a little bit about last year, right, mean,
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  Speaker 1: obviously that is a tough year for everybody working in
• 8:03
  Speaker 1: the market as well, not everybody. And I guess if
• 8:05
  Speaker 1: you held nothing but oil, gas and value stock, you
• 8:07
  Speaker 1: probably doing okay last year. But the majority of people
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  Speaker 1: going into twenty two did not have that kind of portfolio.
• 8:13
  Speaker 1: How did it work out for you? Look, there's not
• 8:16
  Speaker 1: much more that I can say to add to that.
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  Speaker 1: Apart from I think in the UK, as you say,
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  Speaker 1: with energy stocks and some value names which composed most
• 8:26
  Speaker 1: of the foot see one hundred, which meant that it
• 8:28
  Speaker 1: had a very small positive outturn. It's been a really
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  Speaker 1: pretty miserable year. We've had the aim all share of
• 8:36
  Speaker 1: felled by We've got the foot see two fifty down
• 8:40
  Speaker 1: by eighteen percent, so it's not been a fun time
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  Speaker 1: being a small cap investor. In fact, I think UK
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  Speaker 1: smaller companies were the one of the worst performing global
• 8:50
  Speaker 1: asset classes um, so that has been pretty miserable. I
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  Speaker 1: think really it's because the markets are still reeling from
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  Speaker 1: what the effects of the pen em it were and
• 9:01
  Speaker 1: that massive fiscal response to it, which now when we
• 9:04
  Speaker 1: look back on it looks a bit crazy. The central
• 9:07
  Speaker 1: banks printing money at a crazy rate and those really
• 9:10
  Speaker 1: loose military conditions meant that asset prices drove up really sharply,
• 9:15
  Speaker 1: and and now we're seeing the effects of inflation and
• 9:19
  Speaker 1: interest rates and that really hits the small and MidCap
• 9:23
  Speaker 1: in disease pretty hard. Yeah, and awful lot of what
• 9:26
  Speaker 1: happened during the pandemic is beginning to click increasingly crazy,
• 9:29
  Speaker 1: isn't it not just the money printing at the fiscal stimulus. Yeah,
• 9:33
  Speaker 1: the fiscal stimulus. I mean, I mean I'm even thinking
• 9:35
  Speaker 1: about it more broadly. I mean, what we see now,
• 9:38
  Speaker 1: the problems in NHS, the huge learning gaps in education.
• 9:41
  Speaker 1: I mean, some of it just looks like madness. Now
• 9:44
  Speaker 1: when we look back on it, I suppose we have
• 9:45
  Speaker 1: to try and remember how it felt at the time,
• 9:47
  Speaker 1: which was pretty scary, and it felt like the right
• 9:50
  Speaker 1: thing to do to protect lives at all costs, and
• 9:53
  Speaker 1: to and to do to protect businesses at all costs.
• 9:57
  Speaker 1: But we're now left in this stort of situation of
• 10:00
  Speaker 1: huge amounts of uncertainty all over the place. Um, so
• 10:03
  Speaker 1: it's it's it's not just difficult for investors. I think
• 10:06
  Speaker 1: it's difficult for a lot of people. Yeah. It's interesting though,
• 10:09
  Speaker 1: I mean when we talk about this kind of thing
• 10:11
  Speaker 1: now that a lot of the conversation is about how
• 10:13
  Speaker 1: could we possibly have known and how could anyone have
• 10:15
  Speaker 1: foreseen what would happen if we x, Y and z
• 10:17
  Speaker 1: during the pandemic. But it's quite important to remember, actually
• 10:20
  Speaker 1: there were a lot of voices out there even two
• 10:22
  Speaker 1: years ago saying if you produce fiscal stimulus like this,
• 10:26
  Speaker 1: if you print money like this, if you produce a
• 10:28
  Speaker 1: vast amount of demand into a market in which suppliers
• 10:32
  Speaker 1: being crunched, you will create inflation. But central banks flatly
• 10:36
  Speaker 1: refused to believe that. They were utterly convinced it wouldn't happen,
• 10:40
  Speaker 1: and then of course it did. When it comes to
• 10:42
  Speaker 1: the economics and the and the financial side of it,
• 10:45
  Speaker 1: there were voices out there saying, hey, you know what money,
• 10:48
  Speaker 1: great demand, crunched supply, what is it you expect people? No?
• 10:51
  Speaker 1: I completely agree, and I think that actually central banks
• 10:54
  Speaker 1: are at the risk of probably overreacting to to what
• 10:59
  Speaker 1: probably Blee is soon to be peeking inflation, because now
• 11:03
  Speaker 1: they they've sort of suddenly realized the mess that they've
• 11:06
  Speaker 1: got themselves into. I think that that a lot of
• 11:11
  Speaker 1: people in central banks just essue monitorist theory and and
• 11:16
  Speaker 1: have and thought that they could get away with it.
• 11:18
  Speaker 1: And I wonder if we hadn't had the zero COVID
• 11:23
  Speaker 1: policy in China, and if we hadn't had the invasion
• 11:27
  Speaker 1: of Ukraine, whether there might have been a chance of
• 11:30
  Speaker 1: getting away with it or it might not have just
• 11:32
  Speaker 1: been sort of compounded so badly all these inflation reissues
• 11:36
  Speaker 1: and supply chain problems and energy costs rising so much
• 11:40
  Speaker 1: and food costs rising so much. So it's quite interesting
• 11:43
  Speaker 1: to think about how perhaps that did just make everything
• 11:46
  Speaker 1: an awful lot worse. If there is some kind of
• 11:50
  Speaker 1: resolution in Ukraine, will that improve things? Who knows? Well?
• 11:55
  Speaker 1: These would be the interesting possible surprises over the next year.
• 11:58
  Speaker 1: Wasn't the resolution in uk ain um you know, a
• 12:02
  Speaker 1: COVID resolution? I don't even know what that means in
• 12:04
  Speaker 1: China anymore. One that one that didn't evolve zero COVID
• 12:08
  Speaker 1: and didn't evolve you know, full medical breakdown in China
• 12:12
  Speaker 1: is a middle way between that plus resolution in the
• 12:15
  Speaker 1: Ukraine could completely change the global dynamic that we are
• 12:17
  Speaker 1: expecting over the next twelve months. Whatever we think about
• 12:21
  Speaker 1: the what must be a pretty hideous situation in China
• 12:24
  Speaker 1: at the moment, they are going to get to her
• 12:26
  Speaker 1: immunity very quickly at this rate. So I mean, I
• 12:29
  Speaker 1: do think that has to be a short term issue.
• 12:32
  Speaker 1: What I do think is a long term problem is
• 12:35
  Speaker 1: that we've had such a deterioration in relations between the
• 12:39
  Speaker 1: Western China and we've had to really start thinking, I mean,
• 12:43
  Speaker 1: from small companies like Brompton Cycles yesterday to big companies
• 12:47
  Speaker 1: like Apple and Tesla, they're really having to think about
• 12:50
  Speaker 1: how embedded they are in Chinese supply chains and how
• 12:54
  Speaker 1: dependent they are, and so that I think over the
• 12:57
  Speaker 1: longer term is going to have to be considered, and
• 13:00
  Speaker 1: it's also probably going to be pretty inflationary, isn't it.
• 13:03
  Speaker 1: If you're gonna have to start trying to rebuild supply
• 13:06
  Speaker 1: chains in countries that you consider friends or nearby, it
• 13:11
  Speaker 1: doesn't that feel to you like the big theme over
• 13:13
  Speaker 1: the next not just this year, but over the makes
• 13:15
  Speaker 1: five years, the really big theme being that the resharing
• 13:19
  Speaker 1: or freend sharing of supply chains and a lot of
• 13:22
  Speaker 1: what we might in the past have considered to be
• 13:24
  Speaker 1: the incredibly productive activity that a good economy is based on.
• 13:29
  Speaker 1: If that comes home. While I accepted in the short
• 13:32
  Speaker 1: term it is inflationary and the long term possibly it's
• 13:35
  Speaker 1: a very good thing, it is possibly a very good thing.
• 13:38
  Speaker 1: I think that we've realized there is a limit to specialization.
• 13:42
  Speaker 1: Whatever Adam Smith said, you know, we we do have
• 13:46
  Speaker 1: to have that whole shift from justin time and to
• 13:51
  Speaker 1: just in case. We need to have more reliable sources
• 13:54
  Speaker 1: we can't trust, particularly some of these autocratic regimes, they
• 13:58
  Speaker 1: are not particul We're going to act in a way
• 14:01
  Speaker 1: that might suit our capitalist mentality. So if we're going
• 14:05
  Speaker 1: to bring some of the most brilliant parts of the
• 14:08
  Speaker 1: global economy home, it would seem to me that that
• 14:11
  Speaker 1: is a kind of thing that would really benefit your
• 14:14
  Speaker 1: kind of portfolio, and when you mainly invest in small
• 14:17
  Speaker 1: caps in the UK, right in which there's a lot
• 14:19
  Speaker 1: of exciting things happening, and a lot of the things
• 14:21
  Speaker 1: that we might have been outsourcing, the production and manufacturing,
• 14:25
  Speaker 1: and in a way some of the technology we might
• 14:27
  Speaker 1: have been outsourcing to China or to various other countries
• 14:30
  Speaker 1: that are not quite close enough for comfort. We bring
• 14:33
  Speaker 1: that home. That's exciting news for some of the companies
• 14:36
  Speaker 1: that you invest in, Right, Yeah, I think so. I mean,
• 14:38
  Speaker 1: I think we've got to caveat all this by saying
• 14:41
  Speaker 1: it is simple to say let's move things back on
• 14:44
  Speaker 1: shore or close by. It's incredibly complicated to do. We
• 14:49
  Speaker 1: were all aware now of those rising tensions we've got
• 14:52
  Speaker 1: around Taiwan, and that the impact of what we might
• 14:56
  Speaker 1: have whether China invades or blockades Taiwan, but it would
• 15:01
  Speaker 1: make COVID and the war in Ukraine I think looked
• 15:04
  Speaker 1: like a small side show. What I think is interesting
• 15:07
  Speaker 1: for the small companies that we look at is I
• 15:10
  Speaker 1: think the edge that we see in small caps is
• 15:14
  Speaker 1: that we are looking for those management teams that often
• 15:18
  Speaker 1: include the founders that have spotted a niche that they
• 15:22
  Speaker 1: understand upside down and inside out, and they explore that niche,
• 15:27
  Speaker 1: perhaps first in the UK, and if they're successful, they
• 15:30
  Speaker 1: can start to sell that overseas as well. We're looking
• 15:33
  Speaker 1: at really very much asset light businesses, you know, So
• 15:37
  Speaker 1: it's the human capital and whether they can get the
• 15:39
  Speaker 1: right talent on board and the right people on board.
• 15:42
  Speaker 1: I think that's something that we have to really work harder.
• 15:45
  Speaker 1: I think that's I mean, we all know that, but
• 15:47
  Speaker 1: you know, things like we are pretty good on the
• 15:50
  Speaker 1: life sciences, video games. Tax relief has there to a
• 15:53
  Speaker 1: huge amount of creativity in the UK and it's a
• 15:56
  Speaker 1: real hotbed of of that kind of talent um. So
• 15:59
  Speaker 1: I think if we can continue to build on that,
• 16:02
  Speaker 1: and also obviously we've got the big financial sector in
• 16:06
  Speaker 1: the UK that we really need to cherish and look after.
• 16:09
  Speaker 1: So I think if we can overcome some of the
• 16:11
  Speaker 1: problems and getting hold of the right people and keeping
• 16:15
  Speaker 1: the right people. I don't you know. So far Brexit
• 16:18
  Speaker 1: as not has been more of a hindrance than a
• 16:20
  Speaker 1: help to that. So I think that we can hopefully
• 16:25
  Speaker 1: see these smaller companies continue to gain their edge exploit
• 16:28
  Speaker 1: these niches, and we're really supportive of of management teams
• 16:33
  Speaker 1: trying to do that. But to each one I speak
• 16:36
  Speaker 1: to talks about the difficulty in finding the right talent,
• 16:39
  Speaker 1: does that not make you want to shift over away
• 16:41
  Speaker 1: from investing in asset like companies that are very dependent
• 16:45
  Speaker 1: on the right human capital into a different type of
• 16:47
  Speaker 1: sector where perhaps you might be asset heavy and the
• 16:51
  Speaker 1: human capital isn't so important because the systems and structure
• 16:54
  Speaker 1: is already in place a bit more time and I
• 16:56
  Speaker 1: don't know, the energy sector or something. We have always
• 16:59
  Speaker 1: thought it's not just about looking for for quality companies,
• 17:03
  Speaker 1: it's about looking for diversification. Having a well diversified portfolio
• 17:07
  Speaker 1: has meant having exposure to stocks like energy, which did
• 17:11
  Speaker 1: help us a lot in two. Arguably we would have
• 17:14
  Speaker 1: had higher waitings to those kind of companies and therewer
• 17:17
  Speaker 1: waitings to to more interest rate sensitive areas, which are
• 17:22
  Speaker 1: also quite quite asset heavy like house builders and property.
• 17:26
  Speaker 1: So it's about thinking about lots of different dynamics. I
• 17:29
  Speaker 1: suppose it's not just about whether something's asset heavy or
• 17:32
  Speaker 1: asset light. I think as an economy we tend to
• 17:35
  Speaker 1: be asset light, don't we. I mean we are much
• 17:38
  Speaker 1: more services oriented, and so we think the right kind
• 17:41
  Speaker 1: of companies will continue to attract the right kind of talent.
• 17:44
  Speaker 1: It's not being made easier by the last few years
• 17:48
  Speaker 1: and what's happened in the UK economy. I want to
• 17:50
  Speaker 1: come back with a few things that are a bit
• 17:52
  Speaker 1: UK specific in terms of the huge outflows from the
• 17:55
  Speaker 1: UK actual market and the liquidity problems in the UK
• 17:58
  Speaker 1: acting market that you know I've discussed before and that
• 18:01
  Speaker 1: out about just before for Christmas based on Simon French's work.
• 18:04
  Speaker 1: But given that you mentioned house builders, can I just
• 18:08
  Speaker 1: ask you about the UK housing market and if you
• 18:10
  Speaker 1: have any particular view on that. I don't actually know
• 18:13
  Speaker 1: if you're invested in any house builders or not, but
• 18:15
  Speaker 1: possibly done the smaller end you are. But also, is
• 18:17
  Speaker 1: there a challenge to the UK banking sector from a
• 18:21
  Speaker 1: possible significant fall in UK house prices? The health of
• 18:24
  Speaker 1: the housing sector does seem to have affected consumer confidence.
• 18:29
  Speaker 1: I would say that we're in a very different situation
• 18:32
  Speaker 1: than in two thousands and eight in terms of how
• 18:36
  Speaker 1: strong bank balance sheets are able to resist any kind
• 18:39
  Speaker 1: of big draw down in in housing values. I think
• 18:44
  Speaker 1: it's surprising to think that. I think only about a
• 18:46
  Speaker 1: third of houses do have mortgages outstanding on them, so
• 18:50
  Speaker 1: we're perhaps not quite so vulnerable as we as we
• 18:54
  Speaker 1: might have thought. And also we do have I mean,
• 18:57
  Speaker 1: I'm aware that fixed rate mortgages come to an end,
• 19:00
  Speaker 1: but we do have a certain level of fixed rate mortgages,
• 19:05
  Speaker 1: which is very different, for example, from what we saw
• 19:08
  Speaker 1: in the late eighties early nineties, where I think it
• 19:10
  Speaker 1: was about mortgages were variable. Now that's the other way around.
• 19:15
  Speaker 1: The most important thing to support mortgages is obviously high
• 19:20
  Speaker 1: levels of employment, and we certainly do have high levels
• 19:23
  Speaker 1: of employment at the moment, or or low levels of
• 19:25
  Speaker 1: unemployments perhaps more accurate. We have a lot of people
• 19:28
  Speaker 1: I suppose not in the workforce, but we do have
• 19:31
  Speaker 1: um low levels of unemployment and that is very supportive. Actually,
• 19:36
  Speaker 1: Next talked about that in their trading update. For them,
• 19:40
  Speaker 1: employment is the key indicator, you know, that is that
• 19:43
  Speaker 1: is the health of their customer base. It means that
• 19:47
  Speaker 1: their customer base can service their finance obligations and they're
• 19:50
  Speaker 1: not seeing any need to change the provisions that they
• 19:53
  Speaker 1: make in their finance business. There are many big banks
• 19:56
  Speaker 1: that fall within our investment universe. We do have a
• 20:01
  Speaker 1: specialty lender, a big position and a specialty lender. It's
• 20:04
  Speaker 1: one of our top top waitings in in OSB, which
• 20:08
  Speaker 1: used to be known as one Savings bank. They're already
• 20:10
  Speaker 1: assuming a fifty percent chance of a twenty correction over
• 20:16
  Speaker 1: the next year or two in in house prices, but
• 20:18
  Speaker 1: they feel that they're very well covered for that. They've
• 20:21
  Speaker 1: got a good back book which is cash generative, which
• 20:24
  Speaker 1: is well covered. So I think that in the worst
• 20:28
  Speaker 1: case scenario they can even become a landlord in case
• 20:30
  Speaker 1: they need to repossess properties. They're ready to do that.
• 20:33
  Speaker 1: So I think you can find whilst you might have
• 20:36
  Speaker 1: broader risks of of housing correction, you can try and
• 20:39
  Speaker 1: find nimble, um and interesting stocks that should actually prevail
• 20:46
  Speaker 1: during during a time of a house house price correction
• 20:49
  Speaker 1: and actually will hopefully come out the other side and
• 20:52
  Speaker 1: taking more market share. That's the kind of thing that
• 20:54
  Speaker 1: we look for even even if we're looking for a
• 20:57
  Speaker 1: niche in a sector that isn't growing very much her fully,
• 21:00
  Speaker 1: if they've got a genuinely superior service or pricing or product,
• 21:05
  Speaker 1: you know, even in times of difficulty, a good company
• 21:08
  Speaker 1: should be able to gain market share and come out
• 21:10
  Speaker 1: really strong. Yeah, I'm slightly more nervous than you, just
• 21:14
  Speaker 1: on the basis that the majority of those fixed rate
• 21:16
  Speaker 1: mortgages are two year mortgages, and you know, a lots
• 21:19
  Speaker 1: of them will be coming up for renewal relatively soon,
• 21:22
  Speaker 1: and they're going to find there's been a fairly stunning
• 21:24
  Speaker 1: jump in their rate. If lenders have done their job.
• 21:28
  Speaker 1: When you're when you do your mortgage, you're meant to
• 21:31
  Speaker 1: be able to survive. What is it? A three basis
• 21:33
  Speaker 1: point increase in rates? Is that what they test you for?
• 21:37
  Speaker 1: So we're probably testing the limits of that. Given what
• 21:40
  Speaker 1: we've seen in terms of interest rate rises over the
• 21:43
  Speaker 1: last the last year, I mean, I think it's probably
• 21:46
  Speaker 1: worth while also remembering the lot of this has been
• 21:49
  Speaker 1: reflected in valuations. House builders have been absolutely awful over
• 21:54
  Speaker 1: the last year. Percimmon down fifty seven percent, Barret down
• 21:58
  Speaker 1: forty seven percent, over the last year, hog spitals have
• 22:02
  Speaker 1: been have been pretty pretty rubbish, so I think quite
• 22:06
  Speaker 1: a lot of that might already be reflected in valuations.
• 22:10
  Speaker 1: It's interesting, isn't it, this idea of the terminal. I think,
• 22:12
  Speaker 1: all right, a lot of it is reflected in evaluations.
• 22:14
  Speaker 1: But there is a sense that of something has fallen
• 22:16
  Speaker 1: a lot, it becomes cheap. You hear people talking about
• 22:19
  Speaker 1: the tech sector in the US at the moment going oh, look,
• 22:21
  Speaker 1: you know, beasy down from twenty, from thirty to twenty,
• 22:23
  Speaker 1: whatever it is. Therefore, therefore stuff is cheap. But of
• 22:26
  Speaker 1: course falling in price doesn't make you cheap. It just
• 22:28
  Speaker 1: makes you conceivably less expensive. Or if earnings at full
• 22:31
  Speaker 1: earnings have fallen, it could make you just as expensive
• 22:33
  Speaker 1: as you were before. So we have to be very
• 22:35
  Speaker 1: careful about this idea that a fallen price makes something
• 22:37
  Speaker 1: less expensive, because it isn't necessarily so. However, in the
• 22:42
  Speaker 1: UK this is what I want to talk about. I
• 22:44
  Speaker 1: want to talk about price. You know, we can look
• 22:46
  Speaker 1: at the UK now and you can look at a
• 22:47
  Speaker 1: lot of the stocks in your portfolio and say things
• 22:50
  Speaker 1: are actually close to bizarrely cheap. There's an awful lot
• 22:54
  Speaker 1: of value knocking around in the UK market, which doesn't
• 22:57
  Speaker 1: mean that the only thing is going to necessarily go
• 23:00
  Speaker 1: and price as a result, but nonetheless, on evaluation basis,
• 23:04
  Speaker 1: a lot of UK equities and smaller companies in particular
• 23:07
  Speaker 1: perhaps are increasingly cheap, absolutely, and I think that is
• 23:12
  Speaker 1: highlighted by the fact that we consider continue to see
• 23:15
  Speaker 1: bids coming in for stocks that either we hold or
• 23:19
  Speaker 1: or in the wider market it's not a stock we hold,
• 23:22
  Speaker 1: but I noticed that Dignity yesterday had a cash offer.
• 23:26
  Speaker 1: We've had bids for a lot of our portfolio holdings
• 23:29
  Speaker 1: over the last year, and they've come from corporate and
• 23:32
  Speaker 1: private equity, so I think that's showing that they are
• 23:35
  Speaker 1: seeing compelling value in public markets. I think the kind
• 23:39
  Speaker 1: of companies that we look for, and at the risk
• 23:42
  Speaker 1: of playing sort of fund management bingo, of course we're
• 23:45
  Speaker 1: looking for well managed companies with strong balance sheet's a
• 23:48
  Speaker 1: good opportunity, but seriously, these are the kind of companies
• 23:51
  Speaker 1: that are being looked at. So Emis was was bought
• 23:55
  Speaker 1: by a big US corporate, United Health. They have a
• 23:59
  Speaker 1: nice sustainable, repeat revenue model that that is very attractive
• 24:04
  Speaker 1: to to an overseas bidder that the UK market in
• 24:07
  Speaker 1: particular does look vulnerable for bids, and I think that
• 24:12
  Speaker 1: as you raised it before, um, that we might talk
• 24:15
  Speaker 1: about liquidity. I mean, I think that some fund managers,
• 24:18
  Speaker 1: the risk is that they will take a bid that's
• 24:21
  Speaker 1: perhaps too low because they're just desperate for liquidity in
• 24:24
  Speaker 1: their portfolio. And this is interesting, isn't it If if
• 24:28
  Speaker 1: private equity can see the value in the UK market,
• 24:32
  Speaker 1: and so we see these bids coming not to private
• 24:34
  Speaker 1: equally but from wherever they come from, bids that come
• 24:36
  Speaker 1: in with with significant players in the global markets thinking
• 24:40
  Speaker 1: that looks cheap. But by the whole thing, why can't
• 24:43
  Speaker 1: equity investors boast in the UK and abroad look at
• 24:47
  Speaker 1: it and say, well, that looks cheaper by some of
• 24:49
  Speaker 1: the shirts. I think that we've seen outflows which have
• 24:54
  Speaker 1: caused some some force selling and actually in some cases
• 24:59
  Speaker 1: you where you might find liquidity, if you need to
• 25:02
  Speaker 1: find liquidity, it will be in some of those slightly
• 25:05
  Speaker 1: more favorite names because you can you can sell them,
• 25:09
  Speaker 1: So that might have been one of the issues. So, yes,
• 25:13
  Speaker 1: you've had those equity outclothes which have put pressure. You've
• 25:16
  Speaker 1: also got probably quite a sort of short term view.
• 25:20
  Speaker 1: Some some corporates and some private equity players might be
• 25:26
  Speaker 1: able to take a longer term view. That's something that
• 25:29
  Speaker 1: you know, we we find pretty frustrating because you know,
• 25:33
  Speaker 1: short particularly small cap investing, you know, it's volatility is
• 25:37
  Speaker 1: riskier and the over the long term that does give
• 25:40
  Speaker 1: better returns. But people don't like volatility in times like this,
• 25:45
  Speaker 1: particularly now, given the interest rate environment and the risks
• 25:48
  Speaker 1: that they see that that investors have been have been
• 25:52
  Speaker 1: very cautious. I think the we have seen outflows, I
• 25:56
  Speaker 1: mean very steady outclothes every year since Brexit. So presumably
• 26:00
  Speaker 1: there is some kind of Brexit effect as well here,
• 26:03
  Speaker 1: which is that is the UK seen as an absolutely
• 26:07
  Speaker 1: vital place to invest by an asset allocator. I think
• 26:12
  Speaker 1: that you should be looking at the value that there
• 26:14
  Speaker 1: is there, but perhaps that it's it's just not top
• 26:18
  Speaker 1: of mind for overseas and investors. So what catalysts might
• 26:24
  Speaker 1: there be for change here? And I always think of
• 26:26
  Speaker 1: something as it is absolutely cheap. If an area is
• 26:29
  Speaker 1: asuitely cheap and the institutional investors won't buy it or
• 26:32
  Speaker 1: don't buy it for whatever reasons they have, there's a
• 26:33
  Speaker 1: wonderful opportunity for the retail investor, because we don't necessarily
• 26:37
  Speaker 1: need a catalyst. We can wait a lot longer than
• 26:39
  Speaker 1: an institutional investor, but that decide what catalysts might there
• 26:43
  Speaker 1: be for for things to change, for us to suddenly
• 26:46
  Speaker 1: start seeing our performance in the UK. Well, I mean,
• 26:49
  Speaker 1: I think actually it is. It is incredibly unusual to
• 26:53
  Speaker 1: see bear market drawdowns that you see in the smaller
• 26:57
  Speaker 1: companies area. It's very very and usual for them to
• 27:00
  Speaker 1: happen more than more than one year in a row.
• 27:04
  Speaker 1: So you've actually got this and you've kind of got
• 27:06
  Speaker 1: a natural feeling that smaller companies which have been oversold,
• 27:11
  Speaker 1: are cheaper, are often a bit more cyclical. If we
• 27:14
  Speaker 1: do start seeing some sort of positive thoughts about inflation
• 27:18
  Speaker 1: peaking and things like that, you can see that money
• 27:20
  Speaker 1: would come back into into that sector, into the smaller
• 27:24
  Speaker 1: companies arena in particular. And we have had a big
• 27:26
  Speaker 1: drawdown last year, presumably if we do see some sign
• 27:32
  Speaker 1: that ect outflows have peaked, then you know it's some
• 27:35
  Speaker 1: kind of return and some kind of buying will kind
• 27:38
  Speaker 1: of have a double whammy effect. It's I suppose a
• 27:40
  Speaker 1: bit like buying an investment trust a great discount. You
• 27:44
  Speaker 1: know you can if you start feeling more confident on
• 27:46
  Speaker 1: the on the underlying holdings and on the region, and
• 27:50
  Speaker 1: you start getting you know, people can start buying it
• 27:52
  Speaker 1: and reducing that discount. You can have a double whammy effect.
• 27:56
  Speaker 1: Those two things could could be catalysts and as in
• 28:00
  Speaker 1: further M and A will also just start attracting attention
• 28:03
  Speaker 1: to to the UK market and make make it look
• 28:06
  Speaker 1: more attractive. You know, it's not to say that there
• 28:09
  Speaker 1: aren't lots of risks out there, but as I say,
• 28:11
  Speaker 1: in the UK, I think those are probably reflected. Now,
• 28:16
  Speaker 1: can we talk about some of the stocks in your
• 28:18
  Speaker 1: put earlier? I mean, you've talked a lot about macro things,
• 28:21
  Speaker 1: but really you're you're a bottom up investor, aren't you,
• 28:23
  Speaker 1: And we'd we'd love to know about a few of
• 28:26
  Speaker 1: the stocks are at the top of your top of
• 28:28
  Speaker 1: your list at the moment, your personal favorites. So no
• 28:30
  Speaker 1: fund managers are supposed to have favorites, but I knew
• 28:32
  Speaker 1: you all do. Yes, I mean I mentioned osp is
• 28:36
  Speaker 1: doing one of bigger positions, so that would reflect that
• 28:38
  Speaker 1: it's also one of our one of our favorite stocks.
• 28:41
  Speaker 1: I mean, it's on a very low valuation in terms
• 28:45
  Speaker 1: of pe multiple it's got a great yield and we
• 28:49
  Speaker 1: think that they are exceptionally well managed. They've got their
• 28:54
  Speaker 1: profitable cash generative back, but most of their funding is
• 28:58
  Speaker 1: actually from era to two year deposits, which cost less
• 29:02
  Speaker 1: than than Sonia, than you libel and so swap spreads
• 29:06
  Speaker 1: of widen. This means that OSB can be more profitable.
• 29:10
  Speaker 1: So that's that's the name that we really like. Another
• 29:13
  Speaker 1: one is Craneware. Now this is a stop that we own.
• 29:17
  Speaker 1: We've known for a very long time. We earn it
• 29:19
  Speaker 1: in our an BCT since since I p O and
• 29:23
  Speaker 1: and in the Smaller Companies Fund since I think early
• 29:26
  Speaker 1: last year, so we It provides hospital management software to
• 29:32
  Speaker 1: around forty of US hospitals. Now it doesn't have any
• 29:37
  Speaker 1: UK exposure at all. That's a shame. It sounds like
• 29:40
  Speaker 1: we can really do with some hospital managements. Yes, but
• 29:44
  Speaker 1: this is all about the US healthcare spending represents about
• 29:48
  Speaker 1: seventeen percent of g d P and European countries spend
• 29:52
  Speaker 1: around ten to twelve percent. So I mean, whilst arguably
• 29:57
  Speaker 1: we are underspending, I think there's a view that the
• 29:59
  Speaker 1: US healthcare system is is labyrinthy labyrinthin labyrinthine and its complexities.
• 30:07
  Speaker 1: Would that's a great word. That's a great word, and
• 30:09
  Speaker 1: it's because you know, it's it's all the it's it's
• 30:13
  Speaker 1: it's the healthcare billing, the pharmacy management, that pricing. There's
• 30:18
  Speaker 1: lots and lots of lots of complexities in US healthcare
• 30:21
  Speaker 1: and dealing with insurance companies and things like that. So
• 30:25
  Speaker 1: what Cramer does is it helps hospitals and other healthcare
• 30:29
  Speaker 1: providers navigate all this and they've developed a platform to
• 30:35
  Speaker 1: do this and lots of software solutions, and what they
• 30:38
  Speaker 1: basically ensure is that medical procedures and dispensing is correctly
• 30:43
  Speaker 1: coded for insurance companies, and so it involves it helps
• 30:47
  Speaker 1: them avoid over and under charging and improve administrative efficiency. Really,
• 30:54
  Speaker 1: so we think that they are very well set. I mean,
• 30:57
  Speaker 1: there were a lot much fewer and active operations during
• 31:01
  Speaker 1: the time of the pandemic and they're coming back on
• 31:03
  Speaker 1: now UM and so we we also just see that
• 31:07
  Speaker 1: that healthcare is a very resilient area of the market.
• 31:12
  Speaker 1: So UM craneware with good cash generation. They are slightly
• 31:18
  Speaker 1: indebted at the moment because of an acquisition they did
• 31:22
  Speaker 1: a couple of years ago but there are cash editors
• 31:27
  Speaker 1: to expect that debt to reduce rapidly UM And also interestingly,
• 31:31
  Speaker 1: whilst their sales team has to be based out the US,
• 31:34
  Speaker 1: most of the software development is done here in Scotland,
• 31:37
  Speaker 1: so you know you've got that natural arbitrage of of
• 31:40
  Speaker 1: having a lower costs and developing the software in the
• 31:44
  Speaker 1: UK and selling it overseas in the US. So that's
• 31:49
  Speaker 1: another name I suppose we like. Would you like another one? Oh? Yes,
• 31:53
  Speaker 1: it was like just one more? Okay we have Okay,
• 31:59
  Speaker 1: I think we might find Trackcess quite interesting. TRACKSS it
• 32:04
  Speaker 1: provides um software and consultancy to the transport sector, principally
• 32:11
  Speaker 1: the UK train operators and Network Rail. Now I think
• 32:16
  Speaker 1: you'd find it. You'd share the delicious irony that I
• 32:19
  Speaker 1: wanted to go to the tracks as Capital Markets Day,
• 32:22
  Speaker 1: but they were the only way of getting there was
• 32:24
  Speaker 1: with through three trains and one replacement bus service and
• 32:27
  Speaker 1: I wouldn't actually be able to get to lead some
• 32:29
  Speaker 1: back in a day, so I couldn't go to the
• 32:33
  Speaker 1: Capital Markets Day. But luckily a lot of it was
• 32:35
  Speaker 1: available online and I got to watch some of the
• 32:37
  Speaker 1: videos about the new products and services that they have
• 32:40
  Speaker 1: and it's it's super impressive. So so TRACKSS has grown
• 32:44
  Speaker 1: really through through acquisition of small software companies that service
• 32:50
  Speaker 1: the rail sector in the UK, and the Rail Tech
• 32:54
  Speaker 1: and Services Division has has really now established to serving
• 33:00
  Speaker 1: quite a lot of the train operating companies and our
• 33:03
  Speaker 1: network rail. The software delivers efficiency gains in terms of
• 33:08
  Speaker 1: improved operational performance and timetabling and staff rostering. They're one
• 33:14
  Speaker 1: of any three companies in the UK that is a
• 33:16
  Speaker 1: credited to do remote condition monitoring technology. Now this is
• 33:20
  Speaker 1: all the kind of stuff that the unions don't really like,
• 33:25
  Speaker 1: they think you need. The naked eye is better for
• 33:27
  Speaker 1: monitoring the condition of switches for example, and rail lines.
• 33:31
  Speaker 1: But although it does show has been shown that it's
• 33:34
  Speaker 1: very effective this remote condition monitoring. And what's been really
• 33:38
  Speaker 1: interesting is the products really do help companies run more efficiently.
• 33:43
  Speaker 1: So the amid the strikes and travel disruption, tracks has
• 33:48
  Speaker 1: been able to demonstrate that the train off companies that
• 33:51
  Speaker 1: use them can get back up to operational speed after
• 33:54
  Speaker 1: strike days way faster than others and save companies money
• 33:58
  Speaker 1: by more effective time tabling and staff management. So they
• 34:02
  Speaker 1: reduce the dependence on overtime. So that's something that you
• 34:05
  Speaker 1: might have heard about the unions talking about when no
• 34:07
  Speaker 1: one's you know, they're not going to do their overtime,
• 34:10
  Speaker 1: and that's that could be a big threat by the unions.
• 34:12
  Speaker 1: But actually tracks as can help operating companies really modernize
• 34:16
  Speaker 1: and this is something they desperately need to do. They
• 34:19
  Speaker 1: can help them really modernize and and and work more effectively.
• 34:23
  Speaker 1: Um and you know, there is despite the tough hand
• 34:27
  Speaker 1: that they were that the real industry has been dealt
• 34:31
  Speaker 1: through COVID, there is really a long term commitment to
• 34:35
  Speaker 1: grow real capacity and that's been laid out by whichever
• 34:39
  Speaker 1: flavor of government we have because it is greener than
• 34:41
  Speaker 1: cars or planes and it delivers big productivity improvements. So
• 34:47
  Speaker 1: we think tracks this is a really interesting little company
• 34:50
  Speaker 1: which is exceptionally well run, another one of those strong
• 34:54
  Speaker 1: balance sheet, cash generative, and it really delivers critical behind
• 34:59
  Speaker 1: the scenes soft for for all the operating companies and
• 35:02
  Speaker 1: apps and direct competitors are few and far between, so
• 35:07
  Speaker 1: it's something we think will continue to consolidate its market position.
• 35:11
  Speaker 1: It's also seeing lots of opportunities in the US where
• 35:14
  Speaker 1: they've made an initial acquisition there called Railcom and the
• 35:17
  Speaker 1: US US UM rail sector is even more complicated than
• 35:23
  Speaker 1: there's UM and obviously a lot bigger, so it's something
• 35:27
  Speaker 1: we really like. I believe bigger, I can't believe more
• 35:31
  Speaker 1: complicated evaluation, Anna, what is it going to cost us
• 35:35
  Speaker 1: to buy that one? So Tracks is not looking like
• 35:38
  Speaker 1: a cheap company. At the moment um. The price earnings
• 35:44
  Speaker 1: ratio is around twenty seven times UM. The free cash
• 35:49
  Speaker 1: field to be fair for looking out one year is
• 35:52
  Speaker 1: four point eight percent UM. We've seen quite a recovery
• 35:57
  Speaker 1: in the share price. I think since the since the
• 36:02
  Speaker 1: the Capital Markets Day is really highlighted the value of
• 36:06
  Speaker 1: the of the company. Sales have rebounded really strongly. So
• 36:11
  Speaker 1: we had sales growth of around thirty seven percent over
• 36:15
  Speaker 1: the last year. That's because they also have a smaller
• 36:18
  Speaker 1: division which is not core to them, which does events management.
• 36:22
  Speaker 1: So for example, they manage all the people and signposting
• 36:25
  Speaker 1: and stuff around Glastonbury. So there was no Glastonbury the
• 36:28
  Speaker 1: year before, there's Glastonbury this year, so that comes that
• 36:31
  Speaker 1: that is lower margin, but that's a non core part
• 36:33
  Speaker 1: of the business and I think that they will probably
• 36:36
  Speaker 1: if they get there might be a management buy out
• 36:38
  Speaker 1: there or something like that, which will release further value.
• 36:41
  Speaker 1: The good thing about Tracts is they can make really
• 36:44
  Speaker 1: good a creative acquisitions. So yes, it is. It is
• 36:48
  Speaker 1: not a cheap company on any metric. We feel that
• 36:50
  Speaker 1: it's exceptionally well underpinned and that the risks of down
• 36:53
  Speaker 1: grades are are very it's very low. Um and I
• 36:58
  Speaker 1: think we'll have to edit their that's fascinating and as
• 37:01
  Speaker 1: I say, anything that makes our rail sector work better
• 37:04
  Speaker 1: would be much appreciated, and anything that made our NHS
• 37:06
  Speaker 1: work but it would also be much appreciated. UM. And
• 37:09
  Speaker 1: some of the stocks are fascinating. And thank you so much. Okay,
• 37:12
  Speaker 1: thank you, thank you for listening for this week's Marion
• 37:17
  Speaker 1: Talks Money. We will be back next week. And please,
• 37:20
  Speaker 1: of course, if you like our show, which I do,
• 37:22
  Speaker 1: hope you do, rate, review and subscribe wherever you listen
• 37:26
  Speaker 1: to your podcasts. This episode was hosted by Meet Mary's
• 37:29
  Speaker 1: Somerset Web. It was produced by Summer Siety. Special thanks
• 37:32
  Speaker 1: to Anna McDonald and to John Stepic. And of course
• 37:36
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• 37:39
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• 37:43
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