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The Financial Ironmonger Blog No 41/2019

The Financial Ironmonger Blog No 41/2019

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.


All of us are blessed with far greater access to news than ever before, much of it fake or biased; it was ever thus, just the volume got turned up by the internet. As long as you are aware of the inbuilt bias inherent in some outlets, (the BBC hates Brexit, the New York Times is no fan of the Donald), then it is generally a good thing that we can dig further in to lots of subjects. So can everyone else; beware the instant expert.

Those of us who spend what is probably an unhealthy amount of time looking for developing trends not only tend to miss the really big ones, (because they take too long to develop), but also because constant exposure sanitizes you. Things very rarely have the power to shock.

This week not so. I do not understand why the Donald has abandoned the Kurds to the tender mercies of the Turks, given that they are not best friends, but it probably fits in with his refusal to police the world any longer, however dangerous this action looks.  It certainly bares out the old Kurdish saying that the only thing you can trust are the mountains, to which they will be forced to retreat, again.

Here, in the UK, the collapse of the Thomas Cook travel business left 555 empty high street shops, and the 2,500 people who worked therein looking distinctly redundant. A couple of American private equity operations had a look, before concluding that the brand was too damaged, leaving the field wide open to a plucky husband and wife team from the north east, John and Irene Hays, 70 and 65 years old respectively.

They have built up a chain of 190 shops, turning over £1bn last year, on which they made a profit of £10.1mn. I have always been rather sceptical of companies that make such slim returns, (the construction industry springs to mind), since a change in accounting policy, desired or otherwise, can turn x in to y, and the profit disappears. I have no reason to think that the Hays Travel Group is other than perfectly run in accordance with best practices, but look at the risk.

At a stroke, this quadruples their store numbers, and all the new ones need to be rebranded, new IT systems installed, staff recruited and trained etc. The annual business rates on the new stores exceeds last year’s profits by £1.6mn alone, so this thing is going to have to get moving very quickly. It reminds me of the days before supermarkets had checkout tills; everything was about personal service, and dare I say it, home delivery.

They claim that package holidays are on the increase, which if you stretch the definition of the word, they are. A trip to Venice would include flights, accommodation, airport transfer, vaporetto tickets, a night at the opera, a day in a museum, and a booking for dinner, but all that stuff requires local knowledge, skills. Remember, Thomas Cook controlled both the flights and the accommodation, and yet made just £11 per head. I wish them huge luck, but it certainly took the breath away.

Perhaps more predictable was that Sir James Dyson would give up on his electric car project after two years, and a reported spend of £2.5bn. Whilst he could see no way to make a profitable and differentiated product, it takes real bravery to publicly admit defeat, which one suspects many quoted companies would not. I suspect he will be back when others have done the really hard lifting, but the announcement itself would indicate that the industry is not as far on as many had hoped.

Others bash on; at the time of writing, the Ryse Hydrogen company, (an associate of JCB), is on track to buy Wrightbus, a Northern Ireland company made famous for building the London Routemaster buses. There is no doubt that “clean” buses have a substantial impact on air quality in cities, and again, one hopes this prospers. You might think that the imperative was to save as many of the 1,200 directly employed, and numerous others in the supply chain, as possible, but actually the deal nearly foundered on who owned the farmland surrounding the factory. It is now more than 1,000 days since there was a functioning government in the region.

Then, to compound a week of shocks, up pops a possible Brexit deal, all the more remarkable since it was only Tuesday that Merkel was saying that there was little chance, apparently. The German economy is deep in the cactus, a subject to which we will return, but this will be some relief to their car industry.

Details are sketchy, but the plan would appear to be that Northern Ireland remains within both the EU and UK customs systems, as a temporary measure, and the border is set in the Irish Sea, so that whatever needs checking is sorted before it gets there. The physical border between north and south remains as is, (wide open), but there should be economic benefits in the north, given the dual status, and for exit harbours such as Holyhead, where the locals, until recently, were more used to living in containers rather than looking at the contents.

To end with a reminder, however. A week is a long time, in this game.


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.