Jupiter investment manager Alex Savvides on cross-sector opportunities for value investors and employing a ‘business transformation’ approach to targeting UK equities
The dispersion of valuations across markets is creating a world of ‘haves’ and ‘have-nots’, which is in turn creating cross-sector opportunities for value-conscious investors, according to Alex Savvides, lead investment manager on Jupiter’s UK Dynamic Equity fund.
“There are so many interesting things going on in the stockmarket at the moment,” he says in the above video, which was filmed at Wealthwise’s inaugural Wealth Forum towards the end of last year. “The Schiller price/earnings ratio in the US, for example, is near its all-time high – I think it has only been higher twice in its very long history – and yet, underneath it all, you have massive dispersion of valuations.
To generate value these days, you just have to be good capital allocators.”
“You have the ‘haves’ and the ‘have-nots’ so there is lots of opportunity – and those opportunities are actually cross-sector. Not only are there more challenged companies, there are then also companies that are dealing with their challenges more effectively – that is why we are finding it so interesting.
“You do not have to go down the rabbit-hole of challenged sectors that may be in ‘sunset’ industries in order to generate value. You just have to be good capital allocators – you have to be good at cost-base, you have to be good at investing in the right places, you have to be good at focus.”
‘The right places’
So which sectors are Savvides and his colleagues currently identifying as ‘the right places’? “Always in industrials, always in consumer services, always in consumer goods,” he replies. “We don’t say ‘no’ to any industry – there is always a company and a management team underperforming within any sector – but there do seem to be a lot of opportunities in those spaces at the moment.
“You are already seeing a bit of uncertainty over spending and a bit of uncertainty over the global industrial cycle so add a layer of poor historical capital allocation on top – and a management change – and you have the seeds of some very interesting situations.”
You can view the whole video by clicking on the picture above, while the timecodes for individual questions are:
00.00: Could you explain ‘business transformation’ in the context of value investing?
01.18: Why should investors consider this approach to targeting UK equities?
02.41: Is this strategy leading you towards – or away from – any particular sectors?
