February was a mixed month for equity markets from a macro perspective. In the UK, the continued success of the vaccine roll-out allowed the Prime Minister to announce a roadmap to ease restrictions in England, giving companies and consumers a degree of certainty as to the return of more normalised economic activity, reinforced by the extension of support measures announced by the Chancellor in the Budget in early March. However, there is some concern globally that the reopening-driven economic recovery will drive inflation, necessitating a rise in interest rates and downward pressure on equity valuations. Thus far, however, Central Banks appear to be focusing on economic recovery and have signalled little change to policy in the short term. From the Fund’s perspective, we continue to exercise valuation discipline, which we would hope would protect us from the impact that any upwards change in interest rates would have on more highly rated growth stocks.
There was no particular trend to our main contributors in the month. MaxCyte, a life sciences company focused on cell engineering, performed strongly after a strategic fundraise from several specialist US investors ahead of a potential Nasdaq listing. Eco Animal Health, which sells pharmaceuticals products into livestock markets, bounced sharply as their shares benefitted from a strong trading update, where they reported they were significantly ahead of expectations on the continued strong recovery of the Chinese pig market. Finally, Accesso, which sells ticketing and virtual queuing solutions, performed strongly as they announced at the end of January that they expected 2020 results to beat expectations. Accesso should be a direct beneficiary of economic reopening, as their customers (such as amusement parks and ski resorts) reopen and will increasingly need Accesso’s solutions to operate safely. The main detractors to performance were Clinigen and Alpha FX, as they gave up some of their recent gains.
From a trading perspective, we continued to trim some of our more expensive technology stocks, such as Dotdigital and Netcall and top-sliced some other recent strong performers such as Bytes Technology and Marlowe. We started two new holdings of note. Firstly, we supported the IPO of Foresight Group, an infrastructure and private equity investment manager, who should benefit from increasing demand for infrastructure assets (including renewable power generation). We also added a position in Homeserve, which provides emergency household repair policies, and owns Checkatrade in the UK and similar businesses abroad, which provide a curated reference list of tradespeople for consumers. We also added to several existing positions, where we felt valuations were attractive, such as Trifast, Balfour Beatty and Liontrust.