WEBVTT
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Hello and welcome to the midweek edition of the Chezify Podcast.
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The guys are all here.
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How are you, fellas?
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Excellent, excellent.
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Uh, before we get into markets, um, to let you know, we've got four podcasts for you next week.
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Yes, four.
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Um, starting on Monday with one of the best performing UK small cap managers.
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And the week after that, we have one of the biggest names in UK small cap investing.
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So that's going to be very exciting.
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And for the show, um, which is in November, we are talking to one of the biggest names in UK fund management.
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So if you haven't got your tickets yet, go to the website, uh, go to the events page, and remember there's a promo code for you podcast listeners only, podcast in block capitals.
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So get your tickets while you can.
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Now, moving on to markets.
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Well, macro is still the talking point uh because bond yields are up, Brent Crew's back at 106 bucks.
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Got US September inflation numbers later, but and we've said it before, but repeating, companies are doing okay.
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You know, in the UK, we've had far more companies beating or meeting forecasts or raising guidance than we have missing.
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Um, and you've had a couple of nice ones this week, Steve.
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Yeah, excuse me.
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Um, yeah, I mean, interesting uh rather than nice, I suspect is is is a better terminology.
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Um, bite technology was yesterday, um, soft cap was today.
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Now, these, of course, are old-fashioned words for them as IT resellers, so they sell a lot of third-party uh tech and they run tech for in digital companies.
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Um, but they're increasingly looking to become more service-led businesses.
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Um now, both um had very good numbers, both also sort of share prices declined.
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And the common thread that links them to that links to both of them was really about margin pressure.
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So it does seem that um higher costs, things like we've talked about HBM and certain memory chips and costs have really been going up.
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So that's obviously been filtering through the whole um technology stack, and and that's ultimately going to impact on what SoftCat um does, what bite technology does, and it's their ability to now pass those costs on to their clients.
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Now that will take a little bit of time to work through.
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So these last figures, very good, nothing terribly uh negative in the forward uh commentary, but just a little bit of weakness in operating margin in particular.
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So that's something to keep an eye on to see are they able to pass those costs through to clients.
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I suspect they probably will, but the proof of the pudding is always in the eating, so we'll wait and see.
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And of course, then we have we have ASML today as well.
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So I mean, you you probably can't get a better benchmark uh bellwether stock for the the kind of the whole AI um and and chip-led uh trade.
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And again, knockout numbers, absolutely superb.
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Um, they were a little bit weak early morning, but they they've kind of rallied away a little bit.
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But but I mean it's it's it's not massive buying, and I think again, um it's because expectations we've talked about this all year long, expectations have really raced ahead.
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The sh the shares are up about 55% year to date, so you know that's a brilliant return.
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Um, so for the shares to to go forward from there, uh it takes a bit more than just being very positive, even being expectations, and so they maybe just didn't put the polish on the top that that the investors needed to really uh bid the shares up higher, but nothing really negative to see here.
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Um, and James backing consumer land in the UK, pretty decent.
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Yeah, absolutely.
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Resilience really is the watchword there, Ian.
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So we've had Virtu Motors, third profit upgrade this financial year, a record first half for revenues, and Virtue's really doing well with attraction with these Chinese brands.
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So I think the the September plate change month was really strong for them.
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Another resilient kind of niche player is Anglin Direct, so throw it first half results even after less rainfall, which kind of sees the ground, you know, dry up the lakes and whatnot.
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But uh, interestingly, August and September.
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I don't know if you saw there was a 10.7% rise in revenues.
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And uh speaking to the management, they've said a few of their store-based competitors aren't able to continue in the tough market.
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So I think they're reeling in market share.
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And then the other one was Whitbread, wasn't it?
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Yeah, earlier in the week, first half profit beat from Whitbread, strong hotel trade in UK and Germany, sort of strengthens its hand in this battle with Corvex, which is a US activist.
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There's a general meeting on the 9th of November, and the final one to flag was Marsden, so pub group, upgraded profit guidance, strong queue for good world cup.
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So, all in all, pretty decent, pretty decent numbers.
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Yeah, and uh we also have a very interesting call with the renewables infrastructure groups.
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Um, Minash Patel, didn't we?
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Trig used the ticker for that one.
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Yeah, that's right.
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Minash Shah of Infrared, so he was highlighting the kind of diversification and the strength of the balance sheet are two sort of reasons why it perhaps stands out in the sector.
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Really high yield income investors like.
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Um, and I thought that point about repowering assets was quite interesting, didn't you, Ian?
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I thought it was fascinating.
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Yeah, so basically talking about taking old wind farms, dismantling the turbines and putting up more modern ones, uh, and also adding on-site battery storage so that you know, for example, you go to the example of Spain, where they they can basically generate free electricity during the daytime um and uh then sell it on uh in the evening um when there's peak demand.
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So, yeah, the whole thing was fascinating actually.
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We we must write that one up, and again, it kind of is part of this meeting in Europe's renewable challenge thing, which I've talked about and which we've written about.
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Um, I the the other thing that's I I think the main thing that I've seen this week has probably caught most people's attention is this rare double miss from JP Morgan, where Q3 revenue and earnings were light, but the shares are pretty much flat at the close.
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I mean, the shortfall was not in the main business, loans and deposits five, and that's the same for all these big banks, but um, I think they've all suffered a bit from a shortfall in uh trading revenues and investment banking revenues because QQ2 was so strong.
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I think expectation again, Steve, we come back to expectations.
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I think expectations are maybe a little bit uh too for these guys.
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So it's it's odd Ian.
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I find um because they do, I mean, they're on the list of any kind of really big IPO, particularly in America, you'll find JPM as part of the um as part of the book building exercise.
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And um, we've had obviously SpaceX earlier this year, the biggest uh IPO of all time.
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Um, we're talking about maybe next month and Anthropic, which may again be the biggest of all time.
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Um, and it does seem to be a reasonably healthy IPO market in the US, not so much in the UK, but in the US.
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So it's a little bit surprising for me as an outsider looking into the the banking industry, why that side of their business um is is not performing perhaps as strongly as as it might have done.
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But I suppose the investment banking on does more than just IPOs.
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Yeah, but no, you're right.
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You know, I think that it was a surprise, it qualifies as a negative surprise because JP Morgan doesn't generally miss.
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Um the other things actually were on a on a brighter note, and um I find I find it odd to hear myself saying this, but we had decent results from Bellway for the year's July.
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And the outlook, although it was cautious, I've got the feeling that they're they're leaving themselves a little bit of room.
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Now, you know, I'm not gonna be I'm not jumping up and down here, but um this you're not calling the bottom, are you?
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No, no, I'm not, I'm not.
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But this this your first home scheme, we'll get more details in the budget next month.
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Um, that that is obviously gonna be very good for first-time buyers, and it's gonna be very good for developers and new builders.
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And and Bellways, you know, got to be.
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If you like that, if you like that sector, that I would say I would think Bellway's got to be on your list.
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Um, another sector that has seen I I think maybe maybe the bottoms in, it certainly seems to be in terms of net fee income, is the recruiters.
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Because this week we've had Michael Page and Robert Walters both shown positive net fee income growth year on year for the first time in what four or five years?
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Uh Hayes was out on Monday, and that wasn't positive, but it was less negative, if you like.
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Uh, so that's kind of the laggard.
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But I mean Robert Walters up seven percent today on the back of uh just a one percent increase in net fee income for the third quarter.
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So really interesting.
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These classically were regarded as very they are very cyclical, but they were regarded as early indicators of a turn in the economy.
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Problem is they're global, these guys now.
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You know, UK is a tiny bit of their uh overall revenue base, and so you're reliant on global macroeconomy improving.
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And so I think it's a kind of wait and see situation, but you know, better news out of these two areas, really house builders and recruiters.
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It's it's a really good point as well, Ian, because um, as we've talked to a lot of um UK fund managers, they're legit UK, they might be buying UK assets, but their exposure to to revenues and profits is is very much not so much UK because there are so many UK companies that earn quite considerable amounts of their revenue and profits from overseas markets, particularly the EU and the US.
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So actually you buy a UK um focused fund and you're not instead of getting focused uh UK only uh assets.
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Yeah, and and that's not just true of the FTSE 100 either, that's true of the FTSE 250.
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A lot of revenue comes from overseas there.
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Um we've got a couple more firms to keep an eye on, haven't we, this week, Steve?
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Which one's on your radar?
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Uh well I think which did you flag wires was coming up?
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I mean, it's not necessarily a company I I I follow very closely, I have to say, but it's it's the remittances business.
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So it's it's it's basically moving money from A to B cross-border, that's um what it does uh and does very well.
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Um so that I mean that it's had a very, very strong run, let's face it.
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And it's an interesting space, certainly.
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So um it will be quite highly rated, so they will be in that situation where um they'll be expected to not just meet expectations but kind of push expectations a bit higher.
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That will really dictate whether or not the share price um is a is a fall or win on a day.
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Yeah, and James, we haven't spoken much about trusts, but um, I know there's one on your radar tomorrow.
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Yeah, so we've got Sarah from Space, full year results tomorrow.
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We'll be keeping an eye on that one.
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Probably see what Mark Boggett says about the space economy outlook generally, and perhaps a bit more colour around the recent deployment of C share proceeds.
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They've put out a couple of announcements this week.
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They've backed uh you know a few a few firms with those proceeds from May.
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They have, haven't they?
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Yeah, there's been a lot going on with them.
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Um uh that that trust, isn't there?
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And I I just wonder if if Mark's listening, if he tunes in and you fancy joining us on a pod, you know, you did a pod earlier in the year, and uh and it was a very good podcast.
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I just wonder if it might be worth coming back on and just updating people about how the trust is is progressing this year because there is an awful lot of stuff and moving parts going on, so it would be really interesting to get back.
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Yeah, I was thinking exactly the same thing this morning, actually, uh Steve, when I was um chatting with the PR guys about uh about the upcoming results.
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Um, the only thing I got my own is XPS pensions, which is uh a real favourite among growth managers, small cap growth managers.
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Their numbers are out tomorrow.
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Plus, we've got more US banks and insurers, etc.
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But um, I think really um, you know, the the bulk of what we were waiting for is now out this week.
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And so we're getting we're starting to get a picture now of how the land lies uh for these US financials.
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I can't imagine there'll be too many more surprises.
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Um, and I think that's probably it actually for us chaps for uh for today.
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So, as I say, uh lots to look forward to next week.
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In the meantime, we'll see you again on Friday with a look ahead.
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Take care.
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Cheerio
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Hello and welcome to the midweek edition of the Chezify Podcast.
00:00:11.599 --> 00:00:12.480
The guys are all here.
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How are you, fellas?
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Excellent, excellent.
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Uh, before we get into markets, um, to let you know, we've got four podcasts for you next week.
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Yes, four.
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Um, starting on Monday with one of the best performing UK small cap managers.
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And the week after that, we have one of the biggest names in UK small cap investing.
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So that's going to be very exciting.
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And for the show, um, which is in November, we are talking to one of the biggest names in UK fund management.
00:00:47.359 --> 00:00:58.560
So if you haven't got your tickets yet, go to the website, uh, go to the events page, and remember there's a promo code for you podcast listeners only, podcast in block capitals.
00:00:58.799 --> 00:01:00.960
So get your tickets while you can.
00:01:01.200 --> 00:01:03.119
Now, moving on to markets.
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Well, macro is still the talking point uh because bond yields are up, Brent Crew's back at 106 bucks.
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Got US September inflation numbers later, but and we've said it before, but repeating, companies are doing okay.
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You know, in the UK, we've had far more companies beating or meeting forecasts or raising guidance than we have missing.
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Um, and you've had a couple of nice ones this week, Steve.
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Yeah, excuse me.
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Um, yeah, I mean, interesting uh rather than nice, I suspect is is is a better terminology.
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Um, bite technology was yesterday, um, soft cap was today.
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Now, these, of course, are old-fashioned words for them as IT resellers, so they sell a lot of third-party uh tech and they run tech for in digital companies.
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Um, but they're increasingly looking to become more service-led businesses.
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Um now, both um had very good numbers, both also sort of share prices declined.
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And the common thread that links them to that links to both of them was really about margin pressure.
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So it does seem that um higher costs, things like we've talked about HBM and certain memory chips and costs have really been going up.
00:02:16.879 --> 00:02:32.639
So that's obviously been filtering through the whole um technology stack, and and that's ultimately going to impact on what SoftCat um does, what bite technology does, and it's their ability to now pass those costs on to their clients.
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Now that will take a little bit of time to work through.
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So these last figures, very good, nothing terribly uh negative in the forward uh commentary, but just a little bit of weakness in operating margin in particular.
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So that's something to keep an eye on to see are they able to pass those costs through to clients.
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I suspect they probably will, but the proof of the pudding is always in the eating, so we'll wait and see.
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And of course, then we have we have ASML today as well.
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So I mean, you you probably can't get a better benchmark uh bellwether stock for the the kind of the whole AI um and and chip-led uh trade.
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And again, knockout numbers, absolutely superb.
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Um, they were a little bit weak early morning, but they they've kind of rallied away a little bit.
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But but I mean it's it's it's not massive buying, and I think again, um it's because expectations we've talked about this all year long, expectations have really raced ahead.
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The sh the shares are up about 55% year to date, so you know that's a brilliant return.
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Um, so for the shares to to go forward from there, uh it takes a bit more than just being very positive, even being expectations, and so they maybe just didn't put the polish on the top that that the investors needed to really uh bid the shares up higher, but nothing really negative to see here.
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Um, and James backing consumer land in the UK, pretty decent.
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Yeah, absolutely.
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Resilience really is the watchword there, Ian.
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So we've had Virtu Motors, third profit upgrade this financial year, a record first half for revenues, and Virtue's really doing well with attraction with these Chinese brands.
00:04:04.400 --> 00:04:07.520
So I think the the September plate change month was really strong for them.
00:04:07.680 --> 00:04:16.480
Another resilient kind of niche player is Anglin Direct, so throw it first half results even after less rainfall, which kind of sees the ground, you know, dry up the lakes and whatnot.
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But uh, interestingly, August and September.
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I don't know if you saw there was a 10.7% rise in revenues.
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And uh speaking to the management, they've said a few of their store-based competitors aren't able to continue in the tough market.
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So I think they're reeling in market share.
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And then the other one was Whitbread, wasn't it?
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Yeah, earlier in the week, first half profit beat from Whitbread, strong hotel trade in UK and Germany, sort of strengthens its hand in this battle with Corvex, which is a US activist.
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There's a general meeting on the 9th of November, and the final one to flag was Marsden, so pub group, upgraded profit guidance, strong queue for good world cup.
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So, all in all, pretty decent, pretty decent numbers.
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Yeah, and uh we also have a very interesting call with the renewables infrastructure groups.
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Um, Minash Patel, didn't we?
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Trig used the ticker for that one.
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Yeah, that's right.
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Minash Shah of Infrared, so he was highlighting the kind of diversification and the strength of the balance sheet are two sort of reasons why it perhaps stands out in the sector.
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Really high yield income investors like.
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Um, and I thought that point about repowering assets was quite interesting, didn't you, Ian?
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I thought it was fascinating.
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Yeah, so basically talking about taking old wind farms, dismantling the turbines and putting up more modern ones, uh, and also adding on-site battery storage so that you know, for example, you go to the example of Spain, where they they can basically generate free electricity during the daytime um and uh then sell it on uh in the evening um when there's peak demand.
00:05:40.560 --> 00:05:43.120
So, yeah, the whole thing was fascinating actually.
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We we must write that one up, and again, it kind of is part of this meeting in Europe's renewable challenge thing, which I've talked about and which we've written about.
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Um, I the the other thing that's I I think the main thing that I've seen this week has probably caught most people's attention is this rare double miss from JP Morgan, where Q3 revenue and earnings were light, but the shares are pretty much flat at the close.
00:06:06.319 --> 00:06:22.240
I mean, the shortfall was not in the main business, loans and deposits five, and that's the same for all these big banks, but um, I think they've all suffered a bit from a shortfall in uh trading revenues and investment banking revenues because QQ2 was so strong.
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I think expectation again, Steve, we come back to expectations.
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I think expectations are maybe a little bit uh too for these guys.
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So it's it's odd Ian.
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I find um because they do, I mean, they're on the list of any kind of really big IPO, particularly in America, you'll find JPM as part of the um as part of the book building exercise.
00:06:44.319 --> 00:06:48.560
And um, we've had obviously SpaceX earlier this year, the biggest uh IPO of all time.
00:06:48.720 --> 00:06:53.519
Um, we're talking about maybe next month and Anthropic, which may again be the biggest of all time.
00:06:53.600 --> 00:06:59.279
Um, and it does seem to be a reasonably healthy IPO market in the US, not so much in the UK, but in the US.
00:06:59.360 --> 00:07:09.199
So it's a little bit surprising for me as an outsider looking into the the banking industry, why that side of their business um is is not performing perhaps as strongly as as it might have done.
00:07:09.279 --> 00:07:12.399
But I suppose the investment banking on does more than just IPOs.
00:07:12.879 --> 00:07:14.240
Yeah, but no, you're right.
00:07:14.319 --> 00:07:20.399
You know, I think that it was a surprise, it qualifies as a negative surprise because JP Morgan doesn't generally miss.
00:07:20.639 --> 00:07:31.839
Um the other things actually were on a on a brighter note, and um I find I find it odd to hear myself saying this, but we had decent results from Bellway for the year's July.
00:07:31.920 --> 00:07:37.519
And the outlook, although it was cautious, I've got the feeling that they're they're leaving themselves a little bit of room.
00:07:37.600 --> 00:07:43.439
Now, you know, I'm not gonna be I'm not jumping up and down here, but um this you're not calling the bottom, are you?
00:07:43.759 --> 00:07:45.360
No, no, I'm not, I'm not.
00:07:45.519 --> 00:07:50.879
But this this your first home scheme, we'll get more details in the budget next month.
00:07:51.040 --> 00:07:57.519
Um, that that is obviously gonna be very good for first-time buyers, and it's gonna be very good for developers and new builders.
00:07:57.759 --> 00:08:00.160
And and Bellways, you know, got to be.
00:08:00.319 --> 00:08:06.399
If you like that, if you like that sector, that I would say I would think Bellway's got to be on your list.
00:08:06.639 --> 00:08:16.160
Um, another sector that has seen I I think maybe maybe the bottoms in, it certainly seems to be in terms of net fee income, is the recruiters.
00:08:16.399 --> 00:08:26.319
Because this week we've had Michael Page and Robert Walters both shown positive net fee income growth year on year for the first time in what four or five years?
00:08:26.480 --> 00:08:31.759
Uh Hayes was out on Monday, and that wasn't positive, but it was less negative, if you like.
00:08:31.920 --> 00:08:33.679
Uh, so that's kind of the laggard.
00:08:33.919 --> 00:08:41.840
But I mean Robert Walters up seven percent today on the back of uh just a one percent increase in net fee income for the third quarter.
00:08:42.159 --> 00:08:44.080
So really interesting.
00:08:44.399 --> 00:08:52.720
These classically were regarded as very they are very cyclical, but they were regarded as early indicators of a turn in the economy.
00:08:52.960 --> 00:08:54.879
Problem is they're global, these guys now.
00:08:55.039 --> 00:09:03.200
You know, UK is a tiny bit of their uh overall revenue base, and so you're reliant on global macroeconomy improving.
00:09:03.360 --> 00:09:11.919
And so I think it's a kind of wait and see situation, but you know, better news out of these two areas, really house builders and recruiters.
00:09:12.159 --> 00:09:34.000
It's it's a really good point as well, Ian, because um, as we've talked to a lot of um UK fund managers, they're legit UK, they might be buying UK assets, but their exposure to to revenues and profits is is very much not so much UK because there are so many UK companies that earn quite considerable amounts of their revenue and profits from overseas markets, particularly the EU and the US.
00:09:34.240 --> 00:09:41.919
So actually you buy a UK um focused fund and you're not instead of getting focused uh UK only uh assets.
00:09:42.320 --> 00:09:46.639
Yeah, and and that's not just true of the FTSE 100 either, that's true of the FTSE 250.
00:09:46.720 --> 00:09:49.279
A lot of revenue comes from overseas there.
00:09:49.440 --> 00:09:53.279
Um we've got a couple more firms to keep an eye on, haven't we, this week, Steve?
00:09:53.360 --> 00:09:54.879
Which one's on your radar?
00:09:55.200 --> 00:09:58.720
Uh well I think which did you flag wires was coming up?
00:09:59.120 --> 00:10:04.720
I mean, it's not necessarily a company I I I follow very closely, I have to say, but it's it's the remittances business.
00:10:04.799 --> 00:10:11.200
So it's it's it's basically moving money from A to B cross-border, that's um what it does uh and does very well.
00:10:11.360 --> 00:10:16.080
Um so that I mean that it's had a very, very strong run, let's face it.
00:10:16.159 --> 00:10:18.320
And it's an interesting space, certainly.
00:10:18.480 --> 00:10:28.480
So um it will be quite highly rated, so they will be in that situation where um they'll be expected to not just meet expectations but kind of push expectations a bit higher.
00:10:28.639 --> 00:10:34.480
That will really dictate whether or not the share price um is a is a fall or win on a day.
00:10:34.799 --> 00:10:40.080
Yeah, and James, we haven't spoken much about trusts, but um, I know there's one on your radar tomorrow.
00:10:40.240 --> 00:10:42.799
Yeah, so we've got Sarah from Space, full year results tomorrow.
00:10:42.879 --> 00:10:43.840
We'll be keeping an eye on that one.
00:10:44.000 --> 00:10:51.120
Probably see what Mark Boggett says about the space economy outlook generally, and perhaps a bit more colour around the recent deployment of C share proceeds.
00:10:51.360 --> 00:10:52.960
They've put out a couple of announcements this week.
00:10:53.120 --> 00:10:56.720
They've backed uh you know a few a few firms with those proceeds from May.
00:10:57.279 --> 00:10:58.240
They have, haven't they?
00:10:58.320 --> 00:11:00.240
Yeah, there's been a lot going on with them.
00:11:00.559 --> 00:11:02.720
Um uh that that trust, isn't there?
00:11:02.799 --> 00:11:12.080
And I I just wonder if if Mark's listening, if he tunes in and you fancy joining us on a pod, you know, you did a pod earlier in the year, and uh and it was a very good podcast.
00:11:12.159 --> 00:11:23.440
I just wonder if it might be worth coming back on and just updating people about how the trust is is progressing this year because there is an awful lot of stuff and moving parts going on, so it would be really interesting to get back.
00:11:23.759 --> 00:11:31.919
Yeah, I was thinking exactly the same thing this morning, actually, uh Steve, when I was um chatting with the PR guys about uh about the upcoming results.
00:11:32.080 --> 00:11:39.279
Um, the only thing I got my own is XPS pensions, which is uh a real favourite among growth managers, small cap growth managers.
00:11:39.440 --> 00:11:40.960
Their numbers are out tomorrow.
00:11:41.039 --> 00:11:44.159
Plus, we've got more US banks and insurers, etc.
00:11:44.399 --> 00:11:51.120
But um, I think really um, you know, the the bulk of what we were waiting for is now out this week.
00:11:51.200 --> 00:11:56.559
And so we're getting we're starting to get a picture now of how the land lies uh for these US financials.
00:11:56.639 --> 00:11:59.600
I can't imagine there'll be too many more surprises.
00:11:59.840 --> 00:12:04.080
Um, and I think that's probably it actually for us chaps for uh for today.
00:12:04.240 --> 00:12:07.759
So, as I say, uh lots to look forward to next week.
00:12:07.840 --> 00:12:11.519
In the meantime, we'll see you again on Friday with a look ahead.
00:12:11.759 --> 00:12:12.639
Take care.
00:12:12.879 --> 00:12:13.600
Cheerio
