April was another solid month for global markets. In the UK, the earnings season finished as it started with companies continuing to report at or above market estimates, and Q1 and AGM trading updates continued that trend. Despite some very strong starts to 2021, companies continued to temper expectations in forward looking statements, driven by some specific industry concerns (for example raw material inflation, component shortages and increased freight prices) and a more general caution around assuming that the pandemic is behind us. Nevertheless, the macro picture is a positive one, as GDP estimates continue to be upgraded, the UK continues to re-open in line with the government’s plan and monetary policy remains supportive. Increasing worries about a pick-up in inflation and the ever increasing pace of fund raising activity, both IPOs and placings by existing quoted companies, are the main threats to market performance as we move through the summer.
The fund’s top performer in the month was Future, our largest holding, performing strongly on no newsflow and we took this opportunity to trim our holding. Other strong performers included Vitec, having expressed increasing confidence about its markets re-opening, Angle, after winning its first large scale pharmaceutical services contract validating its investment in its clinical labs, and Elixirr International, after reporting strong 2020 results and Q1 2021 trading up 60% on the prior year.
From a trading perspective, we added to our position Wickes, having inherited a small position in its demerger from Travis Perkins, as we think this digitally enabled home improvement retailer should benefit as its “Do it for me” proposition recovers post-pandemic. We also added positions in Music Magpie, a leading “re-commerce” business with interesting growth angles in device rental and in-store kiosks, and Best of the Best, a digital competition organiser with very attractive financial characteristics. We supported Sanne and Restore as they both raised funds to make attractive acquisitions. On the sell side, we trimmed our Volution and Bytes holdings after strong share price performance and exited our holding in Watches of Switzerland on valuation grounds.