Tue, 01 Jul 2008
1st Podcast – David
A few thoughts on the other 4MW picks. I sort of understand Carnival - I run lots of stock screens on the market looking for classic value stocks. With these stocks you;re after blue chips, great brand, solid cash flow and a long term growth story - Carnival ticks all those boxes. The only fly in the ointment is that dead as a parrot share price which has steamed south for as long as I can remember. But, and its a big but, oil will eventually turn and when it does Carnival will fly.
As for infrastructure I sort of agree with both Stephen - its interesting - and Paul - its boring. Some of the most interesting very long term growth stories are the most boring and I have in the past owned infrastructure stocks - HSBC Infrastructure and more recently 3i Infrastructure which I think is a superb global fund. But I have a worry - not that its boring but that its actually too trendy. Too many private equity outfits are chasing the same set of infrastructure assets bidding up prices, especially now all the other usual suspects on the investment scene have vanished.
As for my pick, well it really is boring. The name says it all perpetual preference shares that base their payout on a 1% premium above the london inter bank lending rate. How boring can you get ! But I have to say that I echo Clem Chambers recent comments in the Investors Chronicle that this bear market is only one third of the way in and we won;t see any real hope until the FTSE cruises past 5000 and possibly 4000. In these circumstances playing safe especially in a world supposedly threatened by stagflation seems wise in my book. The ticker is INVR if you can find a dealer who will let you buy it from the Channel Islands International Stock Exchange.
posted at: 16:40 | path: | permanent link to this entry
1st Podcast – Stephen
I know Paul thinks this a bit dull but I bought an Infrastructure fund in my SIPP at IPO 15 months ago and it's delivered a solid 20% return plus a nice little dividend. Infrastructure is an important asset class which is suitable for most portfolios. It's also inflation busting, something we should take into account given the Bank Governor's warnings and recent retail spending figures.
Infrastructure funds finance everything from roads to rail to public services and is a truly globally diversified sector encompassing not only Europe and North America but also the rapidly growing emerging economies of India and China. China alone is spending 10% of its GDP on infrastructure and it is estimated that over the next decade more than $20,000 billion will be spend on these projects worldwide - that sounds like a lot of cash to me.
There are simply far more projects than finance available leading to solid, durable and predictable returns combining capital and income. There are two drawbacks I should mention: firstly the nature of these funds means that there is often early underperformance since they raise funds and gradually spend the cash over a period. Secondly, as my own fund shows, prices have already risen but it has to be said from a relatively low base (sometimes discounted). This is an asset class with huge, global, sustainable demand over the longer-term which can help protect a portfolio against market weakness and the ravages of inflation.
posted at: 14:02 | path: | permanent link to this entry