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The Financial Ironmonger Blog No 15/2017

The Financial Ironmonger Blog No 15/2017

Every week our guest blogger, David Oakes of Mosaic Money Management (aka The Financial Ironmonger), shares with us his take on some of the major UK and overseas macro and political events that shaped the previous week.

Please be reminded the value of investments, and the income from them, may fall or rise. The views expressed in this article are those of the author at the date of publication and not necessarily those of Chelverton Asset Management Limited or Mosaic Money Management. The contents of this article are not intended as investment or tax advice and will not be updated after publication unless otherwise stated.


News that the founders of BrewDog had sold 22% for £213m, to American private equity group TSG Consumer Partners, valuing the business at nearly £1bn, has lead to inevitable charges of selling out. There have been many examples of companies founded on “anti-establishment” principles that get clawed back in to the mainstream, such as Body Shop and Innocent Smoothies. Quite how it is worth this much is anyone’s guess, but interestingly, the small crowd funding investors will only be able to cash out 15% of their holdings.

There is a parallel with political parties; the UKIP defectors are on their way back to the Conservative party, and how long will it be before the Donald gets sucked back in to the Republican mainstream , the price of getting any of his policies enacted? It is not clear that bombing caves in Afghanistan is going to achieve much, bar giving the locals some sore heads. No aggressor has ever defeated them, a record unlikely to change anytime soon.

The Spanish claim over Gibraltar has taken an unexpected turn, meanwhile. The mayor of La Linea de la Concepcion, a town where 10,000 workers cross the border each day, has stated that “Our economic dependency on Gibraltar is practically total”. He reckons that unemployment is running at 35%, so these jobs are vital, together with the Gibraltarians coming the other way, to enjoy Andalucía restaurants and bars, according to the Telegraph.

His preferred solution is to move the border inland, in to Spain, and thus the region would break away from Madrid control, seeking “a creative solution which leads to a common development of the whole area”. Politics being what it is, this seems a most unlikely outcome, but eventually, the voice of the people prevails, now rather quicker than in the past.

Nowhere is this more apparent than in banking, where the incumbents try to downscale, closing branches in a scotched earth policy to try and head off the perceived threat of the start ups, the latest being Redwood Bank, based in Hertfordshire, a wealthy London suburb. With a capital base of £100mn, it is going to focus lending on small and medium sized businesses, deserted by traditional banks.

Which is fair enough, until you learn that Warrington Borough Council is going to put £30m in to this venture, for a 33% equity stake. Warrington is an industrial town in the north-west of England, with no apparent skills in financial services, and Redwood have stated that they will open a branch office there. But this is a serious investment, high-end private equity, so you have to wonder how this is justifiable.

Tesco produced figures for the year ending in February which showed the first increase in UK sales for seven years, a stark reminder of how difficult a time it has had. Operating profits rose 30% to £1.3bn, but after deducting various nasties, pre-tax profits came in at £145m, scant return from a turnover of £37.7bn. Part of the problem is that average food prices are some 6% below where they were 2 years ago, and competition is intense. Waitrose, for instance, regularly send me vouchers offering £15 off if I spend £100.

Booths is a small, independent, northern version of Waitrose, with sites in prosperous towns across Lancashire, Cheshire and Yorkshire, the nearest to where we are staying is in Settle. Early afternoon on Easter Saturday, it was all but deserted, as it was the previous Monday and Wednesday. Whilst it is hardly a scientific survey that is worth extrapolating, the glory days for this sector seem to be well in the past.

The decline of sterling, increase of inflation and rising wage costs will add to the pressures, and if the retailers are finding it tough, you can be certain that is nothing to what the manufacturers must be feeling.


David joined Manchester stockbroker Henry Cooke, Lumsden in 1977 and after becoming a member of the London Stock Exchange in 1984 held a number of senior positions within the firm including Managing Director of the in-house fund management company and member of the Executive Committee.

After senior appointments at Cazenove Fund Management and latterly Mercater Capital Management, David joined Mosaic Money Management in 2013. He has successfully managed private client and fund portfolios for over thirty years and has particular expertise in providing a multi manager service to his loyal client base.

The Financial Ironmonger is a hat-tip to Ironmonger Lane, the location of Chelverton’s London office.