JPMorgan rues slow stock deratings response, according to its Mid Cap Managers.
The managers of JPMorgan Mid Cap investment trust have discussed the performance of the portfolio and what they might have done differently following disappointing end results, which included a 38.4% decrease in its share price.
John Evans, the chair of the £185 million trust, stated in the final results for the year ending September 30, 2022 that the “very disappointing share price total return” for the year ending June 30, 2022 was due to a combination of a “general derating of growth stocks” and general worries about the trading outlook for consumer stocks.
Additionally, as a result of this, JMF’s net asset value decreased by 30.4%, about twice as much as the negative 16% return from its FTSE 250 benchmark. The trust’s discount grew during the course of a year, rising from 2.1% to 13.6%.
The share prices of several of the trust’s top holdings “declined abruptly as the market de-rated these consumer exposed names,” managers Georgina Brittain and Katen Patel noted. Future, Dunelm, JD Sports, and Games Workshop were among them.
“With hindsight, we should have moved faster, but our appraisal of the precise outcome for these individual companies was very much against the market perspective,” they claimed.
Despite reducing the size of several of these investments, the managers claimed that given the present values and long-term prospects, they were compelled to keep their holdings given the size of the market downgrades, which they said averaged a 35% fall on few analyst downgrades.
Given the sharp change in expectations for inflation and consumer confidence in the first quarter of 2022, the managers said, “That said, we have of course made a number of significant modifications to the portfolio in 2022.”
More good news: The company’s revenue position has improved. During the peak of the coronavirus pandemic in 2020 and 2021, dividend cuts among UK corporations had a detrimental impact on the company’s revenue position.
Earnings per share climbed by 68% from 20.32 pence to 34.07 pence while hand net sales increased from £4.8 million to £7.9 million for the year.
