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  • March 6, 2018
    James Rutherford
    Stock markets are capricious in the short-term. Unexpected news flow and temporary factors can trigger bursts of share-price volatility, but leave the long-term fundamentals of companies intact. This is illustrated well by the performance of Pandora, ConvaTec, Nokia and Siemens Gamesa in the last year. While European equities rebounded strongly in the past 12 months as the region’s economic recovery deepened, these four stocks faltered. James Rutherford, Portfolio Manager and Martin Todd, Co-Manager, Hermes European Alpha, at Hermes Investment Management explain why they decided to retain – or add to – these positions and maintain focus on the companies’ prospects for long-term growth. “We aim to not be driven by emotion, but instead examine adverse issues influencing a company’s performance. We seek to understand the nature of these issues – for example, whether they are structural or temporary – and whether we can see a clear road to recovery. This requires discipline and patience, and ultimately helps us look beyond short-term turbulence and keep an evidence-based faith in the ability of our holdings to outperform.”
  • March 6, 2018
    James Rutherford
    Stock markets are capricious in the short-term. Unexpected news flow and temporary factors can trigger bursts of share-price volatility, but leave the long-term fundamentals of companies intact. This is illustrated well by the performance of Pandora, ConvaTec, Nokia and Siemens Gamesa in the last year. While European equities rebounded strongly in the past 12 months as the region’s economic recovery deepened, these four stocks faltered. James Rutherford, Portfolio Manager and Martin Todd, Co-Manager, Hermes European Alpha, at Hermes Investment Management explain why they decided to retain – or add to – these positions and maintain focus on the companies’ prospects for long-term growth. “We aim to not be driven by emotion, but instead examine adverse issues influencing a company’s performance. We seek to understand the nature of these issues – for example, whether they are structural or temporary – and whether we can see a clear road to recovery. This requires discipline and patience, and ultimately helps us look beyond short-term turbulence and keep an evidence-based faith in the ability of our holdings to outperform.”
  • February 22, 2018
    James Rutherford
    Four holdings in the European Alpha Fund missed out on a share of the spoils in 2017 – a vintage year for European equities – as they were pummelled by temporary pressures. We looked beyond this volatility, maintaining our focus on the companies’ prospects for long-term growth. As these pressures begin to ease, we ask: have these stocks turned a corner? Stock markets are capricious in the short-term. Unexpected news flow and temporary factors can trigger bursts of share-price volatility, but leave the long-term fundamentals of companies intact. This is illustrated well by the performance of current holdings Pandora, ConvaTec, Nokia and Siemens Gamesa in the last year.
  • November 6, 2017
    James Rutherford
    Following what has been a golden year for European equity markets, the outlook for the region is looking more uncertain. James Rutherford, Co-Head of Investments for European Equities at Hermes Investment Management, discusses how he is capitalising on market conditions and where he is finding opportunities. European equities have enjoyed a perfect storm of positivity this year. Reduced political uncertainty, improving economic data and steady company results have all driven investors back to this often-overlooked region. However, these benign conditions cannot last forever and several headwinds are rising. Some parts of the market are already experiencing the fickle nature of some of those that have followed the herd. But, while there is uncertainty as to the direction of markets going forward, the indiscriminate behaviour of markets means there are opportunities for investors in Europe.
  • September 14, 2017
    James Rutherford
    The stars have been aligned for European equities for much of 2017. The markets progress and company earnings have for the first time in many years been free of external shocks, recessions, sanctions, credit or currency crisis, surprise policy shocks. James Rutherford, European Equities Portfolio Manager at Hermes Investment Management, discusses how this makes 2017 suddenly an unusual year as growth forecasts have held up, unlike in many recent years where estimates have dwindled over the course of the year. Despite the positive start, some caution remains as Euro strength (notably against the US dollar) will provide a headwind to reported numbers over coming quarters. An element of this has been discounted; overseas earners have underperformed domestic-focused stocks. This is a translation issue rather than a transactional issue so the core organic fundamentals remain firm. The Euro strength may see Draghi soften his tapering stance or maybe the Fed becoming more hawkish. One must remember these sizeable currency moves have moved with rhetoric and political perception, not absolute policy actions, so reversals are easy to see. A more dovish tone would suppress yields in Europe and support a more growth-oriented stance.
  • August 15, 2017
    James Rutherford
    The Portfolio Managers at Hermes European Equities have invested with conviction for a combined 71 years. After the recent 10-year anniversary of their flagship Hermes European Alpha Strategy, they share the rules behind their recipe for investment success. Since its inception on 18 June 2007, the Hermes European Alpha Strategy has returned 5.46% per year gross of fees compared with the FTSE All World Europe’s annualised return of 2.71%, while its assets under management have grown from €57m to €2.5bn. The team’s high-conviction, long-term approach is evident in a high active share and low turnover