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UK small cap valuations are too good to ignore
Neil Hermon, Portfolio Manager of The Henderson Smaller Companies Investment Trust, discusses the challenges small-and-medium sized businesses are facing, why they are more resilient than some might think, and why the small cap story remains compelling.
14 Nov 2022
Key takeaways:
- The perfect storm of the war in Ukraine, China’s zero-covid policy, higher interest rates, and elevated inflation amid a cost-of-living crisis has made it challenging for smaller and medium-sized businesses.
- We think that corporate fundamentals are intrinsically stronger than they were during the Global Financial Crisis of 2008-2009. In particular, balance sheets are more robust, dividends have been recovering strongly, and we are seeing an increase in buybacks.
- Valuations among UK smid-cap stocks are the cheapest they have been since the global financial crisis, and for long-term investors, this presents an attractive opportunity from a stock selection perspective.
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Related insights
14 Nov 2022
Key takeaways:
- The perfect storm of the war in Ukraine, China’s zero-covid policy, higher interest rates, and elevated inflation amid a cost-of-living crisis has made it challenging for smaller and medium-sized businesses.
- We think that corporate fundamentals are intrinsically stronger than they were during the Global Financial Crisis of 2008-2009. In particular, balance sheets are more robust, dividends have been recovering strongly, and we are seeing an increase in buybacks.
- Valuations among UK smid-cap stocks are the cheapest they have been since the global financial crisis, and for long-term investors, this presents an attractive opportunity from a stock selection perspective.