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Nigel Thomas picks winners of UK recovery
by David Campbell on Nov 05, 2013 at 15:41
Citywire AA-rated Nigel Thomas has taken his largest overweight in the £4.33 billion AXA Framlington Select Opportunities fund into ITV as the UK economy continues to recover.
Having begun buying in November 2012, the company is now at the head of a number of UK-domestic focussed plays he is currently investing in, alongside others such as Rightmove.
‘[UK job] vacancies continue to rise at pace and candidates’ availability has fallen further. This augurs well for many of our UK-centric companies,’ said Thomas in his closely followed bi-annual investment report.
‘It is interesting to note that only 26.3% of the All-Share Index aggregated revenues, by geography, come from the UK. The AXA Framlington UK Select Opportunities fund holdings generate 30.3% of their revenues from the UK.
‘National advertising revenue for ITV looks like it could grow by 5% in the fourth quarter of 2013 and is now expected to grow by 5% for 2014. However, recent research from Credit Suisse has reinforced the attraction of its content, as produced by ITV Studios.
‘Studios’ revenues from original commissions grew by 37% between 2010-2012 – the content pipeline probably having been replenished after a long period of underperformance when Studios’ revenues had fallen in the previous five years.’
A string of global hits such as Downton Abbey and Mr Selfridge had delivered margins of around 50% in the production business he added, which could be enhanced further if it is able to repeat the success.
Joining the dots between the resurgence of the UK economy and his long-held focus of transformative business is property listings website Rightmove, with an 81% share of its market.
‘When [it] raised prices for estate agents again this year, only ten left in response. Housing activity has picked up and mobile access is coming through strongly – two billion mobile page impressions in the first half of their year, out of a company total of 7.2 billion.
As mentioned above, Rightmove expects to continue to return all free cashflow to shareholders following payment of a progressive dividend. Very strong cashflow will also continue to fund share buybacks.
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