Talking Barclays, DiscoverIE, Law Debenture, Mercantile, SEGRO and Unilever, plus Apple and Alphabet

Join the guys as they discuss the latest UK news including results from DiscoverIE, Morgan Sindall and Law Debenture, along with the impending retirement of investment trust legend James Henderson.

There's fund manager insight into the Prologis/SEGRO deal, and a look ahead to updates next week from Apple, Barclays, Reckitt and Unilever.

Finally, the guys ask for listeners' thoughts on including a regular single-stock feature on a Friday or publishing a separate midweek podcast featuring a handful of stocks which are not in the news. Send your comments to editorial@sharesify.com.

Transcript

SPEAKER_00 0:06

Hello and welcome to the Friday edition of the Shares If I podcast. James and Steve are here as usual. How are you guys?

SPEAKER_01 0:14

Getting a bit warm again now, isn't it?

SPEAKER_00 0:16

It is a bit warm. Time to break out those shirts, Steve. Lovely story. Um, before we start, uh, what I should flag is uh James and I had a great conversation yesterday with Guy Anderson of Mercantile Investment Trust. This is the 140-year-old trust, which is an AIC millionaire maker. Uh focuses on UK mid and small cap stocks, quality growth, great insights from Guy, weren't they, James? Uh it's well worth a listen or a watch if you haven't seen it yet. We've only had it up on Apple, Spotify, and YouTube for a few days. Already on Apple and Spotify, you know, we're already up with our manager pods, which have been in terms of downloads, which have been up there for several weeks. So if you haven't seen or listened to it yet, make sure you do.

SPEAKER_01 1:01

And talking actually, in uh it's good timing because um talking about the podcast, and and it was a fascinating listener. I tuned into it last night, but um um we've been talking internally, uh listeners, about the podcast, and we wonder if there's scope maybe to do some sort of slightly more in-depth stuff on particular companies, either ones that um have reported or ones that are going to report quite soon. Um now we thought about maybe trying to uh interject a slightly longer segment into this current format or whether to do a separate podcast. So let's hand it over to you. This is this is basically your product. Um, why don't you get in touch with us, editorial at shazzyfy.com, and tell us whether you'd prefer um a sort of two, three-minute segment about a single stock in this podcast, or whether you'd tune in as well to a secondary 10-minute podcast about two or three stocks. So give us your feedback and we'll try to incorporate that in this industry move down the line.

SPEAKER_00 1:56

Yeah, yeah, we want to hear your ideas on this, guys. So please do. Meanwhile, Steve, what's been catching your eye this week?

SPEAKER_01 2:03

Well, it's been you know, it's we talked about this on Wednesday and last Friday. Um it's a real acceleration into big tech earnings, um, the real drive of markets over the last many, many years. Alphabet, we flagged up. The two big issues we flagged again previously are going to be cloud growth and uh capex. And of course, they were the two big issues. Cloud growth, absolutely outstanding, 82%, incredible. Um, considering it's already a $25 billion a year uh business part of the part of their business empire. But CapEx, they're they're talking about spending more than $200 billion um this year, and and ultimately that's what made the markets a bit nervous. They want to see that CapEx, is it going to turn into uh sustainable growth, faster growth? But look at the cloud growth markets. I mean, 82%. That's a hint that it's going certainly in the right direction. So there's there's not that the jury's not out, uh not out yet, but it does seem that they're making the right kind of noises. We've had really interesting results from IBM, we've had interesting results from um a whole host of different tech companies. Um, well worth coming to our website. We've covered many of them today. Intel was out, really interesting company, valuation though, big issue. So loads of stuff have been going on, and it's going to get really, really busy over the coming few weeks as well. And a lot's going on in your environment here and then James as well, right?

SPEAKER_02 3:25

Yeah, James, some big news today. Yeah, big news in the investment trust sector. So not entirely unexpected given the length of the tenure, but James Henderson is to retire next summer. So, you know, well done, James, and congrats. Um, but the good news here is there's a smooth succession. So Laura Fole, who we know we've done on the podcast, um, she'll succeed James as lead manager of uh Lord Deventure and Lowland. Um, Laura's got a very well-established reputation, and uh, you know, Lord Debenture results out today just showed you what a good duo they've been. So outperformed the FTSE Ul Share again in the first half. I think since James took over a league manager in 2003, so he's delivered a nav total return of one to eight, eight percent. So that's comfortably more than the all share, or the double, in fact.

SPEAKER_01 4:06

Right. And interesting James, we of course talked to Laura Foel on the podcast uh a few couple of months ago, I think it was. So I mean, all the stuff she said was still relevant today as it was then. I mean, yeah, she she told us nothing about what she's doing this minute, it's all about policy and strategy and so on. So definitely this is go and have a go and dig out that podcast. It was fascinating, absolutely fascinating.

SPEAKER_00 4:27

Yeah, and of course, Lord Aventure has that unique structure, doesn't it, James?

SPEAKER_02 4:31

It does, so it has the this IPS business which kind of underpins the dividends and allows the managers a bit more flexibility to go around the market cap spectrum. Um, of course, it's got 47 years of either you know maintaining or increasing the dividends, so like a real UK equity income favourite.

SPEAKER_01 4:47

Yeah, and you've been you've been talking about um property quite recently, and I know it's still very much on your mind, isn't it?

SPEAKER_00 4:54

Yeah, well, I had a chat, a very interesting chat, with a very senior manager of a listed property fund uh about Seagro and Prologgers. I won't say who it was, but um Seagro was his biggest position. He met the Pro Logist board, was very impressed with them. Um, asked them what they wanted to know about Seagro. They said, nothing at all. We know exactly what we need to know. He said, Okay, so just give us your best and final offer. And um, he reckons that this is uh the board has recommended it. The put up or shut up deadline's been extended to the 12th of August. The beauty of this deal is you're gonna get cash, but you're also gonna get shares in Prologis, which will have a dual listing in London. This is one of the world's largest real estate investment trusts, specializes in data centres and so on. It's listed in the US otherwise.

SPEAKER_01 5:40

It's listed in the US, otherwise, yeah.

SPEAKER_00 5:42

It's it's a US firm, yeah, yeah. It's a US firm, it's many times bigger than uh Seagro. It does raise the question, interestingly, for other property firms in the UK of um how big are you to still be safe? Because Seagrow was 12 billion and the they're bidding around 14 billion pounds for it. So that was an interesting one. Had a chat with John Morgan, Morgan Sindal CEO. That business just goes from strength to strength. They've raised their medium-term targets now for construction and fit out again. Um, and today we had Discover IE, which is I never know whether it's Discovery or Discover IE. I've probably said it wrong, but cracking was.

SPEAKER_01 6:21

I always call it Discover IE. Yeah, and that's it's one of your favorites, isn't it? I mean, I remember writing about it about 10 years ago when it really first started going on this climb up the value chain, and they've done it so exceptionally well. It's not about just just pumping out commoditized components anymore, it's about best spoke components, and that's why what you know the the thrust of its story, it's it's it's been a brilliant investment over the last decade.

SPEAKER_00 6:44

Well, yeah, the CEO and the CFO have been there for 15 years, they've done a fantastic job with the business. As you say, it makes customized equipment, the very, very particular specifications for its clients. That means its clients are sticky, you know, and however long that product lifetime is, they've got the contract to make it. That what's good is that as well as that organic growth, they make very smart acquisitions, these guys. It had actually kind of fought like a lot of really interesting UK mid-caps, in that yeah, manufacturing mid caps fallen out of favour, but it's had two or three really positive updates this year, and we've written about it. I'm a shareholder, so I put my hand up. Um, I'm very pleased to see the move today. Um, what do we got um next week, though, fellas? Thanks.

SPEAKER_02 7:28

Go ahead. Yeah, big week for consumer goods group. So we've got Unilever Q2 update on Tuesday. Um, been in the doghouse this month since they announced the food separation. Uh, one investor who didn't like it was Terry Smith. I think he sold the entire stake. So uh now they analysts are looking for an acceleration in underlying sales growth to about 4.3 percent. It's a tough space, this given the cost of living pressures. Yeah, um, the following day we've got Wreck It as well. So a Q1 miss the last time they reported. It's also interesting to see Proch and Gamble as well, James. Yeah, project on gamble, right? Yeah, absolutely. Another one keeping on, yeah. Pampers and Gillette, yeah, absolutely.

SPEAKER_01 8:04

And and we, you know, of course, there's going to be loads more tech, so we've got major tech companies, Amazon will be out, um Microsoft's out. There's a whole string of uh companies coming out. Um, Apple is the one that really caught my eye, um, mainly because it's not really been part of the AI trade, and yet it's still the second biggest company. And only by a smidgen is it small than NVIDIA. Um, it's still done incredibly well, and we all know the story, it's got that wall garden approach. Are is it going to drive a new round of iPhone upgrades? And what is the benefit of this new AI integration deal it's it's done with with um Alphabet and Google? So, I mean, these are going to be the the issues that I think investors will be looking for. Is you know what's what's coming down the line, the the the actual results themselves. Um I think they're pricing in to be slightly better than expectations, anyway. Those figures are unlike to drive the share price, it's going to be about what's coming down the line and is it going to make earnings grow faster and are they going to be even more sustainable if they can get more sustainable?

SPEAKER_00 9:05

Yeah, as you always say, Steve, it's about the outlook, not about the past. Um, well, the other the other thing we'll be looking for next week are the bank results. And rather surprisingly, I looked at Barclays, and when you consider it's probably the only UK bank with a credible Wall Street presence, it can, it's not maybe going to go shoulder to shoulder with the Goldman's and the Morgan Stanley's and JP Morgan's the world, but it it is at the table, there's no question. Yet, surprisingly, the forecast for Q2, when you saw these US banks make absolutely ridiculous amounts of money, forecasts are really quite tame. So I don't know what analysts are thinking really with this one. Um, where they see the growth is in the US consumer business, and particularly in fee income. So I'm very curious to see what that happens there. That's on Tuesday, and then we've got Lloyd's and that west later in a week.

SPEAKER_01 9:57

That's a busy week. I mean, it really is starting to ramp up now with the US earnings, but of course, it's the end of June, so generally it's it's interim results for a lot of companies. It might be a bit early, I suppose, for many UK companies. Um the July is normally quite quick turnaround, and the financials typically the first ones that come out with results. Um, you'll probably see a longer drip feed of UK results um come out over the over the next four to six weeks. Um, but the US much tighter, they've got this costly reporting calendar, so they've got to get their numbers to the market very, very sharply. And we're going to be under pressure to try and cover as much of these companies, as many of these companies as we possibly can. Anyway, that's probably about a wrap, I suppose, for um for Super Friday. Um, thanks very much for tuning in as always. Please send us some uh uh feedback. What do you think um of our podcast? Um, do you think our coverage online is uh right, wrong, too big, too small? Send us any feedback you like uh and we'll take it all on board. SharesIfy, uh editorial, sorry, at sharesify.com. And uh with that, we'll see you next week. Have a great weekend.

SPEAKER_00 11:04

Cheers.