Tim Samway, Managing Director at Hyperion Asset Management, says that a focus on macro themes has created a real opportunity in a number of high-quality companies. “It’s very easy to take your eye off the ball, and that is the bottom-up approach of which companies are doing well over the next five years.” Samway says the rotation to resources and ‘value’ stocks has been swift resulting in a one-off rerating of these companies. However, he questions their ability to continually deliver earnings growth over time “One thing we’ve noticed in 20 years of investing is that these rotations unwind quickly and they unwind very strongly. Businesses that continue to deliver EPS growth year after year who are devalued during these rotations periods actually rebound very strongly when the market wakes up.” In this video, he highlights two companies that he believes have been unduly sold off in the current rotation.
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One thing that worries me is that a lot of funds are invested in the same individual quality stocks, hence the high PEs. One only finds out after the event whether these PEs were justified. I couldn't help but smile when hearing the comment at the end about such stocks rebounding when, ".... market wakes up to what they have been DELIVERING (my emphasis) year after year ....", noting that the Hyperion's Small Growth Companies Fund has over 10% invested in Domino's as at January 31.
Healthscope - high quality - delivering year after year for several years...really? All the delivery was the rerating and profit to PE on the sale! Sorry guys, not a real value add video IMHO
Hi Andrew, you're entitled to an opinion, however, keep in mind that Hyperion have a very long track record (and a good one at that). To have one of their senior investors talk openly about holdings that have been sold down and their approach under these circumstances is quite unique and in our opinion adds value to the platform. We can always go and find people who are only willing talk about their winners - but we don't think that is a reflection of the reality of investing.