Some growth names continue to deliver

We tend to have both value and growth stocks in the portfolio, though we prefer to think about the businesses individually, not through the value/growth prism. We also focus on the long term; so we have not made many changes to the portfolio. We may own a growth business because we believe that a valuation is warranted given the growth and quality of earnings. However, the higher the growth the quicker the earnings or cash flow multiples will fall. In three years a growth stock may have multiples below what is now seen as value. Some of the higher growth stocks that had performed well in 2015 were already very well recognised by the market and were trading on big valuations. However some higher growth names, like Mayne Pharma (MYX), continued to deliver on expectations. For value stocks, we assess and reassess how and why these often out of favour stocks will be re-rated. STW Communications (SGN) is in the value camp and trades on undemanding multiples. We see solid earnings growth driven by the top line and synergies. (Alex Shevelev - Portfolio Manager)