United Kingdom 25.6% vs 28.9% in MSCI Europe index
France 12.1% vs 15.7% in MSCI Europe index
Ireland 11.1% vs 0.7% in MSCI Europe index
Germany 10.9% vs. 14.8% in MSCI Europe index
Netherlands 6.7% vs 5.4% in MSCI Europe index
Robinson is focused on the UK names, which accounts for his fund’s leading allocation by country.
One company where the price was right was Howdens Joinery, a UK kitchen manufacturer. The firm’s share price had suffered due to the UK’s decision to leave the EU, but Robinson believes the business remains a market leader.
‘In the UK kitchen market it is what I call the “category killer”. In the last few years it has consistently grown market share, which has increased from 15% to 30%. It is three times larger than the next-biggest competitor and is an excellent business with strong profitability at 40% return on capital employed.'
Elsewhere the fund manager is overweight Irish names, where he sees a lot of good companies that dovetail with his bottom-up strategy. He said in addition, its low taxes, pro-business environment and young English-speaking population has attracted global household names such as Google.
Robinson said there are many good companies in Ireland that are doing better than their competitors. Strong management ensures that they grow and generate profit. He highlights budget airline Ryanair as an example of a domestic success story.
‘It is a very well-managed airline. If you take out fuel, its operating costs are 50% below EasyJet. What that means is that no one can come close to it in terms of pricing and yield – it is able to offer cheaper fares and make a better return. Ryanair can continue to grow market share in the European short-haul market by generating a huge amount of cash,’ he said.
However, the manager is still cautious despite seeing signs of recovery in Ireland, particularly with companies focused on the country itself.
‘There are a number of favourable dynamics. However, a lot of the domestic parts of the economy have not recovered yet, so we remain positive on Ireland and towards companies that are exposed to construction and consumption generally.’