Brexit panic is good news for bargain hunters

A professional investor tells us where he’d put his money. This week: William Meadon of the JP Morgan Claverhouse Investment Trust picks three favourites.

There is a great deal of uncertainty surrounding the British economy and stockmarket. But despite all the doom and gloom, the economy is in better shape than many realise. Indeed, in stark contrast to the horror stories and negative headlines, what we’re seeing on the ground, at the company level, are a number of bright spots. It’s easy to miss these opportunities if you don’t tune out the Brexit-related noise.

JPMorgan Claverhouse aims to provide both capital and income growth for its shareholders by investing in a portfolio of 60 to 80 quoted British equities: reasonably valued quality companies with improving prospects. The fund has just announced its 46th consecutive annual dividend increase, the longest of any UK-only investment trust quoted on the London Stock Exchange.

The housing gloom has gone too far

The negative Brexit-led sentiment around UK house prices has hit the shares of quoted housebuilders severely. But the sector’s decline looks overdone. It is worth noting that national unemployment remains very low and there continues to be a significant structural shortage of housing stock throughout the country.

What’s more, the Help-to-Buy programme is making house purchases more accessible and, if the scheme finishes as planned in 2023, there should be an increasing number of people taking advantage of it in the coming years. We particularly like Barratt Developments (LSE:BDEV) thanks to its strategy of focusing on areas outside London, where there is less concentrated Brexit risk and, consequently, lower house-price volatility. Barratt’s management are experienced, astute operators and although the 8% dividend yield on the shares includes some special payments, even in the absence of these the shares looks attractive.

New managers will boost Glaxo

In the past few years investors have become disenchanted with GlaxoSmithKline (LSE:GSK) owing to its lack of success in drug research & design. As a result, the shares recently became the cheapest of the major European pharmaceutical groups.

However, a change in management should gradually improve the reputation of the company. In the meantime, investors are being paid generously to wait through the quarterly payment of a dividend currently worth more than 5% of the share price. Furthermore, the recent joint venture with Pfizer’s consumer health business highlights the strategic choices available to the company and the management’s ability to exploit them.

A top record in infrastructure

Infrastructure assets continue to be a popular alternative investment. That makes John Laing Group (LSE: JLG) a good pick. It has a strong record of procuring and managing infrastructure assets before realising profits by selling them into the secondary market. Capital is then recycled into new projects or returned to shareholders. The business boasts a geographically diverse portfolio, with assets across the globe. Nevertheless, despite John Laing’s record and the impressive diversity of the portfolio, the group trades at a discount to other infrastructure investment peers.