As illustrated by the extreme share price movements, the market is still grappling with how to treat the global and domestic macro issues of Central Banks handling of inflationary threat and the resulting economic landscape (not to mention ongoing geopolitical risks). These are the macro influences that are almost impossible to accurately forecast. For that reason, we focus more at the micro, or company, level. Obviously, the macro environment causes associated issues at the company level, including costs pressures, supply chain, business confidence, consumer confidence and discretionary spending levels. These challenges will abate over time, but need to considered and respected in the short-term.
What we can say is, the companies in which we are invested are, generally speaking, delivering to our expectation, emerging from the current challenges and are well positioned for the next 12 months.
We still see a gap between price and value in many of our holdings. However, with sentiment feeling more positive, and with reporting season approaching, we hope that some of that inherent value will be released in the short to medium term as the market re-focuses on quality, growing companies and fundamental research. Hopefully sentiment remains positive for a period of time.
We welcome the upcoming reporting season and expect some key themes to emerge. It is likely that management will be non-committal in regard to forward-looking statements, so we have positioned the portfolio towards well capitalised businesses with a growth ambition. In the short-term there is likely to be a focus on cost-control with a medium-term view to growth. Consumer-facing business will be closely watched.