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Jupiter's Darwall buoyed by US move towards free trade
by Matthew Goodburn on Mar 14, 2013 at 10:04
Citywire AA-rated Jupiter European manager Alexander Darwall believes the US shale gas boom is leading to the United States moving away from a protectionist model to a more free trade one, as it reaps the benefits of the cheap energy source on its doorstep.
At the same time he is wary over signs that China is moving towards a more protectionist and nationalistic agenda which will be detrimental to European companies trying to operate there.
Darwall said: ‘The US has been one of the most protectionist countries in the world but it has moved away from that due to the shale oil and gas boom. This is a big positive for companies in our portfolio such as Intertek, Bureau Veritas and DnB Nor.’
He thinks a major threat to his holdings would be if Europe followed suit to become more protectionist.
‘That would be a big problem but I believe Europe has some of the best services technology in the world and a trading and culture mindset second to none.'
Winners and losers becoming clear
Darwall is buoyed by continuing globalisation at a time of great change and says it is becoming ever clearer which companies will succeed and which will not.
‘As never before we are seeing the winners and losers in this environment. Those getting it right are doing very well at a time when many companies are going under water.’
While he is continuing to avoid most banks, Darwall is finding selective opportunities within the broader financials sector, and he continues to avoid commodity stocks.
‘Understanding the super macro is the bedrock of how we pick the fund holdings and we are very weak on short term trading. We don’t like financials because transparency is poor and it is hard to differentiate between them.'
Darwall has recently been adding to media firm Reed Elsevier (6% of the fund) as the company meets a number of his investment criteria, while another core position in German kidney dialysis specialist Fresenius (6.3% of the fund) has also been increased.
'Reed meets my criteria of being well embedded with its customers and having significant points of differentiation [from its peers]. This is extremely important as it has the means to demonstrate value and monetise itself.’
As a famously low turnover manager, Darwall says he has 12 stocks that have been with him for at least the last five years while around one in 10 is sold each year.
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