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Cerno Capital Rounders 2019 with Greenhouse Sports

By |2019-08-01T13:45:14+00:00August 1st, 2019|Cerno Capital, Cerno Capital Posts, Events, Other Posts|

On Wednesday 31st July, we hosted our annual evening of Rounders and BBQ, with six teams joining us to battle it out in Regent’s Park. This year, we were thrilled to be partnering with Greenhouse Sports, a London based charity that uses sports coaching and mentoring to empower young people who are facing disadvantage to help them unlock their full potential. We had a number of the Greenhouse coaches join us on the evening to help show us the ropes, and join in on the pitches. We were lucky to have a dry evening after a few afternoon showers, and players and spectators soon got into the swing of the games. After some hotly contested matches, the Pink team (Farrer & Co) won the tournament by a ½ rounder, although there were some fantastic moments in all games that made for some very exciting play throughout the evening with plenty of fantastic catches and even a few full rounders.       Thanks to all of those who took part to make it such a great evening: BDB Pitmans, PAM, Seddons, Penningtons Manches, Farrer & Co, Withers, Canter Holland and of course, Greenhouse Sports. We have uploaded more photos taken [...]

Renishaw Negotiates a Soft-Patch

By |2019-05-29T13:32:21+00:00May 29th, 2019|Cerno Capital, Cerno Capital Posts, Cerno Global Leaders, General Investment, Other Posts|

Renishaw, a UK engineering company held in the Global Leaders portfolio, held its annual Capital Markets Day on the 14th May in their Gloucestershire Innovation Centre, showcasing a selection of their machines. The company sells high precision measuring, gauging and calibration equipment to the high-end industrial and manufacturing sectors, enabling their customers to optimise processes and output, significantly reducing time and cost of production. Metrology has been core to Renishaw’s business since the founding of the company in 1973, when the original touch-trigger probe was invented by Sir David McMurtry, to test the integrity of finished aerospace components. Traditionally, finished parts are inspected at the end of the production line, if a defect is found, the entire batch is likely to be scrapped. For expensive components such as jet engine blades that cost northward of £250,000 a piece, this can become a costly undertaking. Exhibit: Renishaw Equator Gauging system next to a Fanuc Robodrill Source: Renishaw Renishaw’s value proposition to their customers is to integrate product inspection into the manufacturing process, tracking errors in real-time. Their probes and gauging systems are often found sitting alongside manufacturer’s machines on the factory floor. For instance, their flexible 5-axis probe (shown above), takes [...]

Investment Letter dated 6th February 2019

By |2019-02-06T11:38:44+00:00February 6th, 2019|Cerno Capital, General Investment, Investment Letters, Other Posts|

The MSCI EAFE Index is an index of performance of world shares, ex US. EAFE stands for Europe, Australasia, Far East. This index is often used as a benchmark for US pension fund allocators whose traditional view of the world is divided by US allocations and International allocations. EAFE Equity mandates are granted to invest in shares anywhere in the world, excluding the US. Performance is measured against the MSCI EAFE Index. US$2.2tn is managed this way. The reason for displaying this is to understand the trend in global equity markets, outside the US. The Index, captioned below by the blue line, achieved a recent peak on the 25th of January 2018 and has fallen 16.7% from that peak until the time of writing. The wider All Country ex US (the green line which includes Emerging Markets) peaked on the same day and has fallen 16.3% since then. This data includes the January rally. In simple terms, the world, ex US, has marginally escaped the bear market territory (defined as a 20% fall in an index) which it entered on 17th December. The bigger picture is that the world is slowing, although not abruptly and not currently in the US. [...]

Equity Markets – Swords Drawn

By |2018-10-12T15:55:21+00:00October 12th, 2018|Asset Allocation, Cerno Capital, Cerno Capital Posts, Other Posts|

The sudden break-down in headline indices is stimulating a great deal of considered comment and a tweet or three from President Trump. The Fed’s fault? Well, in part. We summarise Governor Powell’s approach to monetary policy as “giddy up”: to temper the US economy during a period of extranormal growth and build some reserve for future cuts when the next crisis comes along. The second part has been referred to by past Governor Bernanke as “putting bullets in the gun”. In the very short term, portfolio managers of all stripes are assessing the collateral effects of this downward move in equity markets. Questions being asked are how is the dollar responding (down a bit), how is gold responding (up a bit), how is oil responding (down US$2bbl) and finally how is the US bond market responding (down a bit in capital value terms)? Measurement of these cross correlations allows people to assess whether the correction is a crisis - the very short-term conclusion being no. The more worrying combination would be a strong move upward in gold and downward in bond yields which would be reflective of actual cash flows out of equity markets into haven assets. This has not [...]

Outside In: Discover at Cerno Capital

By |2018-09-28T10:49:05+00:00September 28th, 2018|Cerno Capital, Cerno Capital Posts, Events, Other Posts|

Outside In and Cerno Capital are pleased to present Outside In: Discover, an exhibition celebrating artwork by three Outside In artists. Outside In was founded in 2006 at Pallant House Gallery and became an independent charity in 2016 following a highly successful decade. The award-winning charity works to provide a platform for people who face significant barriers to the art world whether due to health, disability, social circumstances or isolation, and currently supports 2,600 artists. We were able to collaborate with Outside In for this exhibition, displaying colourful works that are varied in style and representative of artists from diverse backgrounds reflecting Outside In’s inclusive ethos. All three exhibiting artists create work with strong, vibrant imagery, each with a very unique and distinct practice. Nnena Kalu works in an obsessive and determined way to develop a range of work with an underlying approach of a systematic layering. In the works on display, she uses repetitive lines which she draws in circular motion, responding to the rhythm and noise of creating the work. Once she has applied a painted background, she creates repeated lines with a circular motion, frequently following the same route to create heavily worked into vortex shapes and [...]

Cerno Capital awarded HK Connect status

By |2018-09-26T10:05:55+00:00September 25th, 2018|Cerno Capital, Cerno Capital Posts, General Investment, Other Posts|

Following several months of work, we have been awarded HK Connect status which allows us to invest in Shenzhen and Shanghai listed ‘A’ shares (formerly known as local stock). The ‘stock connect’ link between China’s mainland markets and Hong Kong relaxes restrictions that historically split the Chinese stock market between shares targeted at local investors and those available to international investors. The link was first launched in 2014 between Shanghai and Hong Kong. In late 2016 it was further extended to include the burgeoning, technology hub of Shenzhen. It allows mainland Chinese to purchase shares listed in Hong Kong and lets foreigners buy China A shares listed on the mainland. This vastly expands the range of possible investments we can make in the world’s most exciting economy. Fay Ren, Co-Manager of TM Cerno Pacific & Emerging comments: “The A-share market is more than twice the size of the H-share market, giving us access to a wealth of new ideas to explore. There are some real gems in the mix and we are thrilled with the opportunity to find and own them, in particular the more tech oriented entrepreneurial names that are little known outside the country”. Goldman Sachs, with whom [...]

Ding, Dong Amazon.com – Bubble Valuation Techniques in Action

By |2018-09-17T09:00:15+00:00September 17th, 2018|Bottom Up, Cerno Capital Posts, Other Posts|

Imagine you have been diligently working away as an analyst in your investment bank and someday your boss comes to you and offers a promotion into the Technology team, specialising in e-fulfilment. The largest stock in your coverage is Amazon.com and your first order of business is to establish a price target for the stock from which a recommendation can be derived. All investment banks and brokerages require their analysts to provide price targets. Without them the sales function would struggle and it would be difficult to hang the logic of research recommendations on any peg. Amazon.com presents a particular challenge. It is the second largest listed company in the world, with a market capitalisation of US$969bn and, with US$1.68tn traded in its shares in the past 12 months, is of great economic consequence for “the Street”. Bloomberg indicates that 51 analysts have flagged coverage of the company, 47 maintaining a BUY, 3 advising HOLD and just a single SELL recommendation: from a Mr Allen Gillespie of South Carolina. Amazon.com has been a listed company for 21 years and profitable on a financial accounting basis only in the last 4. The company operates off very low margins, its net margin [...]

FT.com: September churn leaves S&P 500 record a distant memory

By |2018-09-28T11:02:27+00:00September 12th, 2018|Other Posts|

In his latest opinion piece on US markets, Michael Mackenzie references James's recent investment letter - “it is waning global demand which presents the greatest threat, exacerbated by a strong dollar, weakening of the Chinese economy and trade friction. These are hardly imaginary events.” Click here to read the full article. 

Cerno Capital to Vote Against Proposed Acquisition of JLIF

By |2018-09-25T16:08:04+00:00September 7th, 2018|Asset Allocation, Cerno Capital Posts, General Investment, Other Posts|

Update: On the 24th of September, the shareholders of JLIF voted to determine the future of the trust. The turnout displayed a disappointing level of shareholder apathy with just 54% of the available votes being cast. Of the votes cast, 85% voted in favour of the takeover. The shares of JLIF will cease to trade on the 28th of September. Attention will now shift to other listed vehicles that may prove attractive to private capital. Such capital appears to be willing to operate with lower discount rates than the public markets deem prudent. The John Laing Infrastructure Fund Limited is a holding in Cerno multi-asset portfolios due to the attractive characteristics of the infrastructure assets it owns – principally, long term inflation linked cash-flows deriving from availability-based payments on socially and economically important infrastructure assets. On the 16th of July, the Board of John Laing Infrastructure Fund Limited (JLIF) announced that following an unsolicited approach from a consortium of Dalmore Capital Limited and Equitix Investment Management Limited (the Consortium), discussions were continuing over a Possible Offer to purchase the entire shareholder capital of JLIF at a price of 142.5 pence. On the 3rd of August, the possible offer became a [...]