Every investor dreams of being among the first to discover a blue-chip powerhouse of the future. Fortunately, experts at JPMorgan Claverhouse Investment Trust have a track record of identifying tomorrow's star performers.
A winning team
With escape at a premium in 2020, many people turned to fantasy worlds. The already-popular Warhammer space conflict game saw a further surge in popularity, as new players embraced the table-top craze and began to collect its miniature figures. Shares in Nottingham-based manufacturer Games Workshop, which owns the mighty franchise, soared accordingly.
This was good news for investors in JPMorgan Claverhouse Investment Trust, which has long featured Games Workshops heavily in its portfolio. In fact, J.P. Morgan is the company’s biggest institutional holder. That association dates from an early visit to its factory, where the founders impressed with their ambition, capacity and investment.
Claverhouse’s faith in the firm’s growth potential has been amply repaid. Games Workshop has proved itself capable of engaging with its customer base to generate ever more popular new products. And there’s much more expansion to come.
UK means global
According to Claverhouse manager Callum Abbott, the company exemplifies the fact that UK equities investment offers access to truly global businesses. “Games Workshop have already had quite a bit of success in the US, but there’s still plenty of potential in that very rich market. And they’re at a very early stage in China, where there’s enormous scope for growth,” Abbott says.
“The other great advantage of creating a franchise like this is the ability to build new revenue streams, for instance by licensing your IP to other content creators like TV and film. We think Games Workshop’s ability to leverage its IP is still at an early stage, and that’s why it remains one of our favoured stocks in the fund.”
Stars of the future
Games Workshop is just one example of the players in the Claverhouse portfolio who don’t feature in the FT100 just yet. Since its inception in 1963, the trust has always sought out income-generating companies that can offer consistent and growing dividends. Its experts have been careful to select not just dependable household names such as Persimmon or Rio Tinto, but growing businesses that earn their place in the fund by demonstrating their potential to be blue-chip FTSE 100 not FT 100.
Exhibit A – Top 10 overweight positions (as at 31 December 2020)
Source: J.P. Morgan Asset Management, Factset. The investment trust is actively managed. Holdings, sector weights, allocations and leverage, as applicable, are subject to change at the discretion of the Investment Manager without notice.
Growth model
Softcat, another firm in this category, provides technology solutions to the private and public sectors. Demand for its services has risen in the pandemic as more organisations have sought help to move to remote- or cloud-based working. However, it was the company’s business model, hinged on well trained and highly incentivised sales teams, that convinced Claverhouse of Softcat’s star potential.
“What they’ve been hugely successful at is going deeper with their customers,” says Abbott. “The underlying growth is winning new business, but the real growth is earning more of their customers’ IT spend, year on year, by becoming a trusted partner. We’re confident that the quality of their service offering, and their potential to take a bigger share of a highly fragmented industry, will mean an attractive growth profile over many years.”
Not just on the high street
A more well-known presence on the portfolio is Next. This might seem counter-intuitive, given how many of the brand’s peers from high street retail are struggling. However, the fashion house has a reputation as one of the UK’s best-run firms and has outperformed expectations throughout the pandemic. Owner Simon Wolfson is renowned for his detailed knowledge of product prices, store performance and margins, according to the Claverhouse managers.
“Next still has a high street presence, as showpieces and as capacity for when shoppers do go back,” says Abbott. “However, it also has a highly efficient machine in its online retail offering. Besides offering Next products, it provides a sales and delivery platform to other retailers who don’t have the ability to do that themselves. It’s become a real one-stop shop for high street clothing.”
Get an early ticket
We believe currently undervalued and underowned, UK equities are well placed to soar on the back of a recovery from the Covid-19 pandemic. Those who choose Claverhouse for investing their ISA allowance will have the chance not just to hitch their wagon to some of the UK’s most consistent performers, but to get in early with those poised to become the blue-chip elite of the future.
