AXA Framlington Fund Manager George Luckraft caught up with DirectorsTalk for an exclusive interview to discuss how 2016 went for them, standout investments such as KBC Advanced Technologies Plc (LON:KBC), E2V Technologies PLC, Anglo Pacific Group plc, Central Asia Metals Ltd & IQE plc, his views on prospects for 2017, interesting sectors and liking the look of DFS Furniture PLC (LON:DFS) for 2017
Q1: Now George, how do you feel 2016 went for you?
A1: Like a lot of people, it was a tough year, rather the opposite of 2015. So we had a period this year with the largest stocks in the market, particularly the oils and the miners, performing very strongly and miners were a particular issue for an income fund in the majority of them. A couple of dividends at the beginning of the year and then having sold them badly they then performed and commodity prices were a lot stronger than expected so quite a tough environment in that respect.
Q2: Were there any standout investments in your portfolio?
A2: There was a few takeovers in the portfolio so earlier in the year had a takeover of KBC Advanced Technologies Plc (LON:KBC) at a good price and latterly E2V Technologies PLC (LON:E2V), actually having had a poor trading statement, also had a takeover so they performed well. Other standout, a couple of mining holdings, smaller ones where the dividends didn’t get cut, Anglo Pacific Group plc (LON:APF) and Central Asia Metals Ltd (LON:CAML), they performed very well and IQE plc (LON:IQE) more than doubled during the year in the portfolio.
Q3: So what are your views on prospects for 2017?
A3: Well I think it’s going to be a tough environment with the bond markets carrying on selling off as US interests rise and I think that’s going to cause a reasonably tougher environment. I think the interesting bit will be we’ll see the real impact of Brexit coming through as Article 50 is declared in March and then we’ll start to see probably some more impacts on the economy. As usual the stock market’s discounting mechanism with all stocks and the domestically-orientated have already fallen back to levels suggesting much tougher environment.
Q4: What sectors do you think will be interesting this year?
A4: I think for me it will be some of the domestic ones because the valuations are such that if they manage to see sensible trading a lot of those shares look very cheap so I think it’ll be keeping an eye on those and trying to take those companies that can continue to take market share and hopefully not too tough on the UK economic environment.
Q5: Are there any particular stocks that you like the look of for 2017?
A5: The last stock I bought for the portfolio was DFS Furniture Plc (LON:DFS) which would fit into the criteria as I was saying before, share price has fallen a long way since the Brexit decision and the current share price. They should be having a special dividend so the overall yield on the portfolio will be around between 9% or 10% on the stock and this is a company that’s faired very strongly, relatively, during the tough environment over the financial crisis so hopefully they’ll be in a position to do that again.
KBC Advanced Technologies Plc (LON:KBC) provides software and consultancy services to the oil and gas industry, focused on the upstream and downstream (oil refining and refinery-integrated petrochemicals) segments.
E2V Technologies PLC (LON:E2V) is engaged in providing image sensors and camera solutions. The Company operates through three segments: Imaging, RF Power and Semiconductors.
Anglo Pacific Group plc (LON:APF) is a United Kingdom-based company, which focuses on royalties connected with the mining of natural resources. The Company’s producing royalties include Kestrel, Narrabri, Maracas Menchen, El Valle- Boinas/Carles (EVBC) and Four Mile.
Central Asia Metals Ltd (LON:CAML) c is a mining and exploration company. The Company’s principal business activity is the production of copper cathode at its Kounrad operations in Kazakhstan. It also owns various exploration projects in Mongolia and holds interest in the copper tailings project in Chile.
IQE plc (LON:IQE) is a United Kingdom-based holding company. The Company is engaged in the research, development and provision of engineering consultancy services to the compound semiconductor industry.
