For financial professionals in the UK

Fund Manager September Commentary – Lowland Investment Company

Laura Foll, CFA

Laura Foll, CFA

Portfolio Manager

9 Oct 2020

At the company level, the most significant news during the month came from the non-life insurance industry, with two separate pieces of news. Firstly, the results of the High Court case around business interruption insurance meant greater clarity for insurers held such as Hiscox about what their claims are likely to be from ‘lockdown’, and it is comfortably within the range of estimates already given by the company. This removes one of the overhangs on the shares and is why Hiscox was one of the largest contributors to performance this month. At the opposite end of the spectrum, the outcome of the FCA market study into car/home insurance pricing means that new and existing customers will be charged the same price if they come via the same sales channel (for example price comparison websites). This means a change of pricing model for insurers versus history, and it is unclear what the impact on future underwriting margins will be. Direct Line are currently in consultation with the FCA about the proposal, and we have a call scheduled with the Direct Line management team to learn more.

During September there were no new holdings, but existing holdings including diversified miner Anglo American, brick manufacturer Ibstock, vehicle hire company Redde Northgate and information services provider Euromoney were added to. These purchases were funded by reducing the (long held) position in defence equipment manufacturer Avon Rubber, and selling the remaining holding in HICL Infrastructure.

We have never known trading conditions for companies to be so disparate depending what end market the company operates in. Some companies held (such as Halfords and Studio Retail) are seeing very strong demand for their products, while other companies held (such as Ten Entertainment, which operates bowling alleys) are facing the uncertain prospect of further restrictions on trading (for example curfews, local or possibly even national ‘lockdown’). These very disparate trading conditions are meaning that topdown economic data is, in our view, providing little insight into the state of the economy. We cannot add value attempting to predict the course of the virus or responsive policy measures. Instead, we are spending our time talking to companies, in particular focusing on whether balance sheets can withstand further disruptions to trading and what valuations appear to be factoring in (in other words whether they are factoring in a swift return to ‘normal’ trading conditions, or not).

These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.


Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.


The information in this article does not qualify as an investment recommendation.


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Before investing in an investment trust referred to in this document, you should satisfy yourself as to its suitability and the risks involved, you may wish to consult a financial adviser. This is a marketing communication. Please refer to the AIFMD Disclosure document and Annual Report of the AIF before making any final investment decisions.
    Specific risks
  • If a Company's portfolio is concentrated towards a particular country or geographical region, the investment carries greater risk than a portfolio that is diversified across more countries.
  • Some of the investments in this portfolio are in smaller company shares. They may be more difficult to buy and sell, and their share prices may fluctuate more than those of larger companies.
  • This Company is suitable to be used as one component of several within a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested in this Company.
  • Active management techniques that have worked well in normal market conditions could prove ineffective or negative for performance at other times.
  • The Company could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the Company.
  • Shares can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result.
  • The return on your investment is directly related to the prevailing market price of the Company's shares, which will trade at a varying discount (or premium) relative to the value of the underlying assets of the Company. As a result, losses (or gains) may be higher or lower than those of the Company's assets.
  • The Company may use gearing (borrowing to invest) as part of its investment strategy. If the Company utilises its ability to gear, the profits and losses incurred by the Company can be greater than those of a Company that does not use gearing.