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Ashburton Investment Models Richard Robinson Europe going global June 2009.

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Presentation on theme: "Ashburton Investment Models Richard Robinson Europe going global June 2009."— Presentation transcript:

1 Ashburton Investment Models Richard Robinson Europe going global June 2009

2 Investment Briefing June 2009 Short term Stock selection Quant Screen (Valuation & Momentum) Bottom up (CROCI, P/NAV, DCF) Technical (RSI, volume, MACD) Company valuation Analyst Input Meet management (where possible) Inventories, sector indicators, etc. Qualitative research Long term Mid term Death of Cheap Oil Supply Oil Services Oil E&P Integrated Alt. Energy Other ppppppppppppp ppppppppppppp ppppppppppppp De- leveraging consumer Gov. Stimuli ppp Internal Feedback + Analyst Feedback + Independent + General Research Investment Process Div. Infrast Shipping General Multiplier Metals & Mining Rail Gov. Efficiency & Tax Revenue Protectionism Trade down Resilient Demand Food Shortages Financials Early Cyclicals Bottom Up

3 Investment Briefing June 2009 De-leveraging consumer Government Stimuli Irving Fisher: “When indebtedness occurs, fiscal & monetary policy become impotent” The Monetarist View The quantity theory of money: A fine balance = Nom. GDP Money Supply X The Money Multiplier Velocity John Meynard Keynes: “Prime the pump” Div. Infrastructure Rail Outsourcing & Efficiency drives General Multiplier Resilient Demand ‘Trade down’ Cyclicals Food Shortages

4 Investment Briefing June 2009 Gov. Stimulus InfrastructureRail Metals + Mining Shipping Defence & Protectionism Gov. Efficiency & Tax Revenue Long Term - RAIL China Monthly Steel Products Output (Heavy Steel Rail) 1. Ageing transport infrastructure; US need to spend EUR100bn+ Russia’s last railway program €380bn to be spent by Improve efficiency of existing networks; Introduction of European Rail Traffic Management 3. China looks to increase capacity, rural connections $250bn infrastructure programme to go towards transport infrastructure Rail (10,000 km/pa.) Supply Demand Crossovers Bulk of sales government driven as most rail operators state-owned Expected cumulative growth in Rail from E of 10% Decades of chronic underinvestment.

5 Investment Briefing June 2009 Gov. Stimulus InfrastructureRail Metals + Mining Shipping Defence & Protectionism Gov. Efficiency & Tax Revenue 2 yrs- traded GOGL over 25 times Return of +581% v -14% (buy and hold) Beaching of the Pasha in June 2007 Supply Tightens Bad weather + low inventories+ rumours of ship owners imminent bankruptcy – reduces fleet size by 15%. Day Rates double low inventories+ strong demand from China …Tight supply & strong demand Constrained Supply when we owned and stock rose when we owned and stock fell Short Term - SHIPPING Supply Demand Crossovers

6 Investment Briefing June 2009 Chile last year produced 30% of the worlds salmon Disease (ISA): Chilean Salmon Production has been decimated (-60%). Global Production (Supply) falling 9% Demand increasing by 5-8%. Out of the 230k tonnes lost to the US (from Chile, Norway are increasing exports by an expected 60k tonnes a year. Supply Demand Crossovers FOOD SHORTAGES – decreasing supply Velocity Of Money Resilient Demand Trade Down Food Shortages

7 Investment Briefing June 2009 Why has oil turned higher? Macro Turnaround Risk appetite increasing (Dollar weakness) Leading to a return of Financial Speculation Fundamentals (Supply / Demand) Significant OPEC cuts (although compliance has weakened) Increasing Chinese imports - Chinese Build in Strategic Reserves Death of Cheap Oil Supply IntegratedAlt Energy Oil E &P Oil Services Oil Prices – Why the recovery? Bear Case Demand has collapsed US (& Global) Inventories are high. Consequently Oil price collapsed OPEC CUTS 68% 89%

8 Investment Briefing June 2009 Chinese Strategic Petroleum Reserve (SPR) Imports have spiked in March and April Completion of phase 1 of SPR  Can not keep oil below ground (wrong geology-not salt) Had to build land based storage: Aoshan Dalian, Huangdao, Zhenhai Other support from: Further non-OPEC supply shut-ins A positive driving season Oil Prices – Why the recovery? Death of Cheap Oil Supply IntegratedAlt Energy Oil E &P Oil Services

9 Investment Briefing June 2009 Energy sector provides defensive and cyclical opportunities Source: Ashburton Source: Thomson Financial Datastream, MFG Portfolio allocation Death of Cheap Oil Supply (as at ) Death of Cheap Oil Supply, 17.7 Alternative Energy, 1.43 Integrated, 5.80 Oil E&P, 4.91 Oil Services, 5.60 Death of Cheap Oil Supply IntegratedAlt Energy Oil E &P Oil Services

10 Investment Briefing June 2009 Government Stimuli Div. Infrastructure Rail Gov. efficiency & Tax revenue General Multiplier Shipping Metals, Mining & Materials Defence & Protectionism Government Stimuli Div. Infrastructure Rail Gov. efficiency & Tax revenue General Multiplier Shipping Metals, Mining & Materials Defence & Protectionism Fund Overview A fine balance = Nom. GDP Money Supply X The Money Multiplier De-leveraging consumer Resilient Demand ‘Trade down’ Cyclicals Food Requirements De-leveraging consumer Resilient Demand ‘Trade down’ Cyclicals Food Shortages Velocity

11 Investment Briefing June 2009 De-leveraging consumer De-leveraging consumer 19% Resilient Demand ‘Trade down’ Cyclicals Food Shortages Cyclical Sector (12%) CYCLICALDEFENSIVE 25% 43% Government Stimuli 31% Div. Infrastructure Rail Gov. efficiency & Tax revenue General Multiplier Shipping Metals, Mining & Materials Defence & Protectionism Money Supply Velocity Fund Overview 31% 19% Oil Services + E&P & Alt 12% Integrated Oil 6% Death of Cheap Oil Supply 18% Fin’s + Early Cyclicals 25% Bottom up 4% Other 29% 72% 25%

12 Investment Briefing June 2009 European Fund Sector weightings (as at ) Source: Ashburton (Jersey) Limited, MSCI. Date: Ashburton European Equity Fund MSCI Europe INDUSTRIALS ENERGY INFORMATION TECHNOLOGY FINANCIALS MATERIALS TELECOMMUNICATION SERVICES CONSUMER DISCRETIONARY HEALTH CARE CONSUMER STAPLES UTILITIES Underweight

13 Investment Briefing June 2009 Top Quartile YTD, 3, 5 and 10 years Ranked No.2 over 5 years and No. 9 over 10 years Ashburton European Equity Fund A top performer YTD3 yr5 yr10 yr %RankQtl%RankQtl%RankQtl%RankQtl Ashburton European Equity Fund MSCI Europe Out performance

14 DISCLAIMER Ashburton (Jersey) Limited is referred to in this context as ‘Ashburton’. This document does not constitute an offer or solicitation to any person in any jurisdiction in which Ashburton is not authorised or permitted to communicate with potential investors, or to anyone who would be an unlawful recipient, and is only intended for use by original recipients and addressees. The original recipient is solely responsible for any actions in further distributing this document, and should be satisfied in doing so that there is no breach of local legislation or regulation. The information is intended solely for use by Ashburton clients or prospective clients, and should not be reproduced or distributed except via original recipients acting as professional intermediaries. This document is not for distribution in the United States. Prospective investors should inform themselves and if need be take appropriate advice regarding applicable legal, taxation and exchange control regulations in countries of their citizenship, residence or domicile which may be relevant to the acquisition, holding, transfer, redemption or disposal of any investments herein solicited. Any opinions expressed herein are those at the date this material is issued. Data, models and other statistics are sourced from our own records, unless otherwise stated. Ashburton believes that the information contained is from reliable sources, but we do not guarantee the relevance, accuracy or completeness thereof. We caution that the value of investments and the income derived, may fluctuate and it is possible that an investor may incur losses, including a loss of the principal invested. Past performance is not generally indicative of future performance. Investors whose reference currency differs from that in which the underlying assets are invested may be subject to exchange rate movements that alter the value of their investments. Ashburton (Jersey) Limited (Company Registration No ) is a member of the FirstRand Group, is regulated by the Jersey Financial Services Commission and has its registered office at 17 Hilary Street, St Helier, Jersey JE4 8SJ. Ashburton (Jersey) Limited is registered as a Foreign Investment Services Provider in South Africa in accordance with Section 8 of the Financial Advisory & Intermediary Services Act 2002.


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