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Weekly insights from the Trail

Three things that got the team talking this week

April 6, 2023April 21st, 2023
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1. He’s been everywhere, man…

Blake Henricks, Firetrail deputy MD and Portfolio Manager of the Australian High Conviction Fund, has just returned from travelling the world. He’s been to the United Kingdom, Germany, France, Switzerland, and Norway getting research insights on the ground!

The key takeaways from his trip were:

  • Everyone is talking about labour inflation!
  • On the energy transition, we expect to see the EU respond to the recent IRA in the US with similar subsidies versus their current approach of a carbon tax.
  • Blake didn’t freeze in Norway. He did get an insight into their large EV market. 85% of EV charging happens at home, and people tend to sit in their car if charging ‘on the go’ versus purchase from a convenience store.
  • In UK supermarkets we are seeing the discounters take material share as the industry remains a battleground.
  • Blake had a site tour of Vifor (CSL) in Switzerland where he saw how they take iron ore (65% grade) and process it to make it injectable! Vifor estimate 3 billion people worldwide are iron deficient, 1.2 billion being chronic.

Blake visiting S3 Global Opportunities Fund holding Schneider Electric

Vifor (CSL) Iron Ore

UK Supermarkets remain a battleground of the ‘Big 4’ (Tesco, Asda, Sainsbury’s, Morrisons) versus discounters (Aldi, Lidl)

 

Source: Citi Research. Kantar Worldpanel.

2. Time for takeoff…

As we head into the Easter and school holiday period in Australia, we are keeping a close watch on travel numbers.

IATA (International air transport association) passenger data showed stronger passenger traffic levels for February, led by China’s reopening. IATA total domestic travel in February was up 25.2% YoY while international travel was up 89.7% YoY.

Relative to pre-pandemic levels, China total domestic travel is at 97.2%, while international travel is at 77.5%.

The infographic below shows the total revenue from hotel and vacation rentals in Europe from 2017 to 2022, with a forecast to 2027 showing an increase in travel versus pre-Covid levels.

Source: Morgan Stanley

3. Look out for the crash landing…

We saw this chart at a Betta Electrical conference last week. It shows sales results for some of the big retailers, including Harvey Norman, JB HiFi, and The Good Guys. And we’ve heard similar feedback from furniture retailers on our recent trips to Melbourne. Sales have softened significantly since the end of January…

Source: Betta Electrical

Companies mentioned are illustrative only and not a recommendation to buy or sell any particular security.

Disclaimer

This article is prepared by Firetrail Investments Pty Limited (‘Firetrail’) (ABN 98 622 377 913, AFSL 516821) as the investment manager of the Firetrail Australian High Conviction Fund (ARSN 624 136 045), the Firetrail Absolute Return Fund (ARSN 624 135 879), the Firetrail Australian Small Companies Fund (ARSN 638 792 113) and the Firetrail S3 Global Opportunities Fund (ARSN 653 717 625) (‘the Funds’). Pinnacle Fund Services Limited ('PFSL') (ABN 29 082 494 362, AFSL 238371) is the product issuer of the Fund. PFSL is not licensed to provide financial product advice. PFSL is a wholly-owned subsidiary of the Pinnacle Investment Management Group Limited (‘Pinnacle’) (ABN 22 100 325 184). The Product Disclosure Statement (‘PDS’) and Target Market Determination (‘TMD’) of the relevant Fund are available via the links below. Any potential investor should consider the PDS and TMD before deciding whether to acquire, or continue to hold units in, the Fund.

Links to the Product Disclosure Statement: WHT3810AU, WHT5134AU, WHT3093AU, WHT7794AU

Links to the Target Market Determination: WHT3810AU, WHT5134AU, WHT3093AU, WHT7794AU

For historic TMD’s please contact Pinnacle client service Phone 1300 010 311 or Email service@pinnacleinvestment.com

This communication is for general information only. It is not intended as a securities recommendation or statement of opinion intended to influence a person or persons in making a decision in relation to investment. It has been prepared without taking account of any person’s objectives, financial situation or needs. Any persons relying on this information should obtain professional advice before doing so. Past performance is for illustrative purposes only and is not indicative of future performance.

Whilst Firetrail, PFSL and Pinnacle believe the information contained in this communication is reliable, no warranty is given as to its accuracy, reliability or completeness and persons relying on this information do so at their own risk. Subject to any liability which cannot be excluded under the relevant laws, Firetrail, PFSL and Pinnacle disclaim all liability to any person relying on the information contained in this communication in respect of any loss or damage (including consequential loss or damage), however caused, which may be suffered or arise directly or indirectly in respect of such information. This disclaimer extends to any entity that may distribute this communication.

Any opinions and forecasts reflect the judgment and assumptions of Firetrail and its representatives on the basis of information available as at the date of publication and may later change without notice. Any projections contained in this presentation are estimates only and may not be realised in the future.

Unauthorised use, copying, distribution, replication, posting, transmitting, publication, display, or reproduction in whole or in part of the information contained in this communication is prohibited without obtaining prior written permission from Firetrail. Pinnacle and its associates may have interests in financial products and may receive fees from companies referred to during this communication.

This may contain the trade names or trademarks of various third parties, and if so, any such use is solely for illustrative purposes only. All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with, endorsement by, or association of any kind between them and Firetrail.

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