When I think about Finsbury Growth & Income Trust’s 2021, I think with chagrin and euphoria respectively about the shares of two of its biggest holdings. I also think about the mediocre showing of the shares of a third, middling-sized holding, where that lacklustre performance presented an opportunity to buy a lot more.
It strikes me that in expanding on this teasing introduction I can convey something of how we invest shareholders’ capital and the types of companies that we hope will do well for them.
The London Stock Exchange’s ambitious data deal
Our problem stock in 2021 was London Stock Exchange Group (LSE: LSEG), which we have held for the best part of 20 years. It has been a great investment. For instance, over the five years to the end of 2020, its shares more than trebled. However, disappointingly, in 2021 they fell by over 20%. This can be ascribed to some investors worrying that LSE has recently been too ambitious – last year it closed the biggest acquisition in its history, Refinitiv.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
This deal makes LSE, on some measures, the world’s top provider of market data and analytics. It is a leap into the big league. We can understand why some have decided to wait and see whether LSE has bitten off more than it can chew. But we remain long-term supporters. The transaction is consistent with LSE’s clearly articulated and hugely successful strategy, and market data is the gold dust of the 21st century. So we not only held, but we also bought more.
Diageo: profiting from wealthier drinkers
The winner was another long-term holding – Diageo (LSE: DGE). As a career-long UK equity investor I am always so grateful that Diageo is a UK quoted company – it has been a reliable cornerstone for us forever. Diageo is evidently the best spirits company in the world and spirits are a highly profitable and growing sector.
It is a long-established trend that as the world gets wealthier people drink less alcohol. Is that bad news for Diageo? Not really, because, crucially, richer people drink more better-quality products. And this phenomenon is helpful for Diageo and helps explain why its shares rose by more than 40% in 2021.
By and large, over my career it has been right to be optimistic about the global economy and today is no different, with digital technology accelerating wealth creation. Owning Diageo’s shares is still a great way to participate in things getting steadily better.
Fever-Tree: creating cachet
We think the same is true, as a corollary, for the third holding – Fever-Tree (LSE: FEVR). Fever-Tree has brilliantly created a new beverage category that did not exist 15 years ago – premium mixers for the growing premium spirits industry. As such it is not really competing against mass-market brands. Customers love the taste and luxury cachet the Fever-Tree brand conveys. Its success is manifest in the UK.
Now the question is whether Fever-Tree can replicate that domestic success in the US and continental Europe. If it can, then there is little doubt its shares have enormous potential. Of course, by the time you know for sure, it will be too late. So, we must take a view. The early signs for Fever-Tree abroad, particularly in the US, look thrilling. Accordingly, we bought more in 2021 – both the shares and the product.
-
Top-quality, rapidly growing European stocks are selling at enticing valuationsTimothy Lewis, portfolio manager at JPMorgan European Growth & Income tells us where he’d put his money
-
Check Your State Pension forecast tool launched to ‘simplify’ filling National Insurance Contributions gapsNews The government claims the online Check Your State Pension forecast will allow people to avoid having to phone HMRC and the DWP
-
Top-quality, rapidly growing European stocks are selling at enticing valuations
Timothy Lewis, portfolio manager at JPMorgan European Growth & Income tells us where he’d put his money
-
AstraZeneca CEO’s £1.8mn pay rise approved despite shareholder oppositionAstraZeneca hiked its dividend to persuade shareholders to accept CEO Pascal Soriot’s pay rise. Is he worth his salary?
-
Adidas, Nike or Jordans - could collectable trainers make you rich?The right pair of trainers can fetch six figures. Here's how you can start collecting vintage Adidas, Nike or Jordans now
-
The industry at the heart of global technologyThe semiconductor industry powers key trends such as artificial intelligence, says Rupert Hargreaves
-
Three emerging Asian markets to invest inProfessional investor Chetan Sehgal of Templeton Emerging Markets Investment Trust tells us where he’d put his money
-
What to consider before investing in small-cap indexesSmall-cap index trackers show why your choice of benchmark can make a large difference to long-term returns
-
Why space investments are the way to go for investorsSpace investments will change our world beyond recognition, UK investors should take note
-
Time to tap into Africa’s mobile money boomFavourable demographics have put Africa on the path to growth when it comes to mobile money and digital banking
