Artemis IM: ‘Cockroaches’, the values ​​that survived the disaster

(AOF) – Russia’s attack on Ukraine has turned the investment outlook upside down. When asked by AOF, Simon Edelsten, global equity manager at Artemis Investment Management, revealed the strategy he is implementing against this difficult backdrop.

Prior to the Ukraine war, tech stocks were under pressure, especially due to rising interest rates. What has changed for some of them today?

The Ukrainian war makes an imminent rate hike less likely. Tech stocks are also unlikely to be seriously affected by the war as part of their day-to-day business. That’s why we’re investing in tech stocks again after a dip late last year.

In which areas can we find what you call “cockroaches”: values ​​that can survive disasters?

We have core investments in U.S. railroads, telecommunications operators and some healthcare companies that are not significantly affected by higher commodity prices or a conflict-induced economic slowdown. Some of these stocks have modest valuations and are now attracting interest due to their defensive and dependable nature.

Which tech areas should still be avoided?

We continue to steer clear of immature tech companies with high valuations or not yet profitable. Shares of companies like Tesla, which have fallen from $1,200 to $800, illustrate the risk, as they could earn just $10 this year while still trading at 80 times earnings. These stocks can easily fall sharply before they get their money’s worth.

Historically, how has the stock market reacted to war? What lessons can we learn from those periods?

The stock market typically overreacts to war in the first few weeks and offers intrepid investors the opportunity to increase their equity positions to attractive levels. Our policy will be to increase our equity exposure by increasing our positions in the financially safest and highest quality opportunities. For example, after the recent 20% and 10% declines, Amazon and Alphabet’s shares trade at about 28 and 17 times earnings over the next few years, respectively. Despite the economic challenges associated with Russia’s invasion of Ukraine, we believe these and similar investments now provide a good entry point for long-term investors.

Interview with Christophe Jégu.

Leave a Comment

%d bloggers like this: