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First State Global Listed Infrastructure
North American profits
Citywire A-rated Peter Meany has been taking profits across a range of North American stocks and recycling the proceeds into a number of European laggards.
Meany has recently built his stake in Eurotunnel to more than 2% of the £550 million fund after taking profits on firms such as mobile phone mast builder American Tower, and US prisons operator Corrections Corp as he believes Eurotunnel has been sold down too harshly due to being a European stock.
Core holding American Tower has been reduced to a slight underweight after what Meany calls a ‘phenomenal run’ which saw the company benefit from huge structural growth and strong buying from property managers after it was converted to a Reit structure last year.
Eurotunnel a 'quality business'
He took advantage of weakness in Eurotunnel’s price over the past few months with the company plagued by its complicated debt structure and overhang of stock formerly owned by Goldman Sachs.
‘I have always seen it as a high quality business with high quality assets. The cost of building it was exorbitant and it had a very complicated debt structure, but we saw a good entry point and have started to build our position.’
Part of the stake was also funded by a reduction in Meany’s holding in Paris Airport by 1% as Meany was wary of having too much exposure to France, where the government is leaning heavily on companies to increase its tax take amid a backdrop of ongoing austerity.
‘We do not want to increase our exposure to France too much so recycled Paris Airport into Eurotunnel.’
Meany is wary of how austerity is affecting Europe’s regulated utilities and has taken his UK water utilities exposure to zero in the past few months as private equity firms paid what he considers to be over-inflated prices for the assets.
He has also sold down his German utility exposure ahead of further regulatory rulings later this year which he expects to put pressure on margins.
Utilities still make up a core part of the portfolio, with 18% of the fund in toll roads, as well as significant stakes in oil storage firms like Vopak, Eurotunnel and mobile tower operators.
Inflation on investors minds
Overall, Meany estimates that around 70% of the holdings in the portfolio would be able to pass on rises in inflation to their customers if an inflationary environment returns over the next few years.
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