We look beyond ESG presentations and fully aware of âgreenwashingâ because it looks âgood.â We dislike box-tickers. We always have.
For us, ESG considerations are a basic operating system for any business that wants to survive, let alone thrive in the times ahead.
We analyse each company differently because they are unique in their own way. We invest across sectors and use common sense.Â
Our companies may be asset rich or growing or serving a niche market. Some of our companies are leaders and have an advantage over their competition while others are challengers, going after an industry leader or even expanding the addressable market. Our portfolio is a mixed bag!
Warpaint (W7L) dates its origins back to 1992 when current CEO Sam Bazini and Managing Director Eoin Macleod started buying and selling close-out and excess cosmetics and fragrances. With its customers increasingly seeking a complete range of cosmetics, in 2002 the first brand (named W7) was launched â named after the prefix of the Companyâs postcode in West London. This brand now accounts for over half its total sales.
From these beginnings Warpaint floated on AIM in 2016 and has enjoyed a strong growth trajectory, driven by increasing sales to UK retailers and internationally via local distributors or retail chains. It also owns the Technic brand which is sold in the UK and Europe with a major focus on the gifting market, largely for supermarkets and high street retailers. Smaller brands include Manâstuff, Body Collection and Chit Chat.
Warpaint has not implemented a price increase since January 2022 but is certainly enjoying volume growth. Moreover, it is benefiting from its greater scale, operational gearing, new product development and a change in mix (stronger everyday sales vs gifting) as well as weaker freight rates and more favourable US$ purchases. The US is also spearheading its growth ambitions.
Our investment thesis for Warpaint is simple. The original management team retain 50% of the company, so are highly committed to achieving success for all its stakeholders. By selling high quality products at affordable prices it has happy customers, it also operates in growth markets and of major significance it is currently enjoying an upgrade cycle in terms of consistently outperforming expectations.
Cosmetics brand Warpaint (W7L) is acutely aware of the need to contribute to society in an ethical and sustainable manner. The company is working with consulting group Planet Mark to measure and report against its Scope 1 and 2 emissions, as well as reviewing its onsite energy, water and recycling management.
No products are tested on animals and with âcruelty freeâ in mind, Warpaint are members of PETAâs âBeauty Without Bunnies Programâ. Warpaint remains committed to becoming an industry leader in sustainable products â the majority of packaging is recyclable. All new products are manufactured without parabens, with the goal of being paraben free in the next 12-18 months.
The head office is a âgreen buildingâ with an âAâ rated energy certificate and provides free electric charging points for employees.
hVIVO is a clinical research organisation in human challenge study clinical trials that large recognisable pharmaceutical organisations use to validate the efficacy of their vaccines and other antiviral products. After recent wins, the companyâs unique portfolio has expanded to 11 human challenge models.
hVIVOâs expertise in challenge studies has come into its own in the face of the COVID-19 pandemic and, in October 2020, it secured a contract with the UK Government for the development of a human challenge study model for COVID-19. The company has successfully won contracts in other respiratory diseases and malaria â moving beyond COVID.
MAM are global manufacturers of advanced carbon and ceramic materials solving complex problems for their customers. The companyâs product line includes high-temperature insulation products used to reduce energy consumption, electrical carbon, linear and rotary transfer systems used for transferring electrical energy in motor and generator applications, seals and bearings, ceramic cores, piezoelectric sensors and transducers, crucibles, and others. The companyâs customers come from sectors including healthcare, petrochemical, transportation, electronics, energy and other industrial applications.
The transformation of the business in the past decade has helped it grow exponentially. MAM is well positioned in attractive, growing markets where differentiated products are valued by consumers helping them deliver strong organic growth.
Premier Foods trades from 15 sites, and predominantly operates in the ambient food sector which is one of the largest sectors in the domestic grocery market. Premier estimates that approximately 94% of UK households buy one or more of its products every year.
In July 2022, the company acquired The Spice Tailor, a premium authentic Indian and South East Asian recipe kit maker for ÂŁ43m. The brand was complementary to the Groupâs Sharwoodâs and Lloyd Grossman brands and will benefit from Premierâs wide distribution network. In times like these, while consumers are conscious of what they spend in restaurants and takeaways, it seems Premierâs trusted and iconic brands including Mr Kipling, Bisto and Homepride continue to be in high demand.
CEO Alex Whitehouse has done a fantastic job since taking the helm and if the market fails to value the company properly, it may well fall into the hands of private equity.
Strix is the global leader in the design, manufacture, and supply of kettle safety controls complementary water temperature management components, appliances, and water filtration products. For over half a century they have used their presence for a greater good by constantly pushing boundaries to create and deliver the right solutions for the customers which are the most trusted and reliable technology in the world.
With their recent acquisition of LAICA in October 2022, delivery of record sales by the Aqua Optima brand for yet another year, Launch of the Halo Pure technology, followed by a contract obtained in China recently and the evolution of this technology to farming solutions for clean drinking water it has proved to be a year of significant incremental business opportunities and growth for Strix.
Victrex is an innovative world leader in high performance polymer solutions, focused on the strategic markets of Automotive, Aerospace, Energy & Industrial, Electronics and Medical. With over 40 years of experience, they develop world leading solutions in PEEK and PAEK based polymers, and selected semi-finished and finished parts which enable environmental and societal benefits for stakeholders.
Every day millions of people rely on sustainable products and applications which contain the polymers and materials from Victrex. Victrex is committed to bring transformational and sustainable products which address the worldâs material challenges, every day with sustainability embedded in its culture thoroughly.
Hill & Smith (HILS) has three main business divisions: galvanising services which increases the sustainability and maintenance free life of steel products including structural steel work, bridges among others infrastructure markets.
The Engineered Solutions arm supplies engineered steel and composite solutions with low embodied energy for a wide range of markets including power generation, rail, marine and housing. The third division is the roads and security arm which supplies products and services to support road and highway infrastructure including temporary and permanent road safety barriers.
The company was founded in Brierley Hill, in the West Midlands, by Edward Hill in 1824 but today derives 64% of operating profits from the United States. It has truly changed with the changing times and continues to grow organically as well as bolt-on acquisitions.
Hargreaves has three business segments: Services, Hargreaves Land and an investment in a German joint-venture, Hargreaves Raw Materials Services GmbH HMRS. The Services arm provides critical support to many core industries such as Energy, Environmental, UK infrastructure as well as certain manufacturing industries. The land arm is focused on the sustainable development of brownfield sites for both residential and commercial use. Finally, the HMRS business trades in specialist commodity markets and owns DK Recycling which is a specialist recycler of steel waste material.
With ÂŁ18m cash and the NAV per share at 603p we believe there is further hidden value in its land bank.
It is worth highlighting some of the groupâs defensive characteristics also â in the Services arm it has over 50 term and framework contracts, most of which have inflation related escalation clauses â giving a great hedge against the current high inflation environment.
We will incorporate ESG issues into investment analysis and decision-making processes.
We will be active owners and incorporate ESG issues into our ownership policies and practices.
We will seek appropriate disclosure on ESG issues by the entities in which we invest.
The PRI is the worldâs leading proponent of responsible investment. It works to understand the investment implications of environmental, social and governance (ESG) factors and to support its international network of investor signatories in incorporating these factors into their investment and ownership decisions. At this moment, we are not members but we do recognise that applying these principles may better align investors with the broader objectives of society. The six Principles offer a menu of possible actions for incorporating ESG issues into investment practice and mention them alongside.
We will promote acceptance and implementation of the Principles within the investment industry.
We will work together to enhance our effectiveness in implementing the Principles.
We will each report on our activities and progress towards implementing the Principles.
We will incorporate ESG issues into investment analysis and decision-making processes.
We will be active owners and incorporate ESG issues into our ownership policies and practices.
We will seek appropriate disclosure on ESG issues by the entities in which we invest.
The PRI is the worldâs leading proponent of responsible investment. It works to understand the investment implications of environmental, social and governance (ESG) factors and to support its international network of investor signatories in incorporating these factors into their investment and ownership decisions. At this moment, we are not members but we do recognise that applying these principles may better align investors with the broader objectives of society. The six Principles offer a menu of possible actions for incorporating ESG issues into investment practice and mention them alongside.
We will promote acceptance and implementation of the Principles within the investment industry.
We will work together to enhance our effectiveness in implementing the Principles.
We will each report on our activities and progress towards implementing the Principles.
It promotes effective stewardship in the UK setting out good practices for institutional investors and asset managers. Stewardship activities include monitoring assets and service providers, engaging issuers and holding them to account on material issues, and publicly reporting on the outcomes of these activities.
Sterling Investment Management Limited fully supports and follows the objectives of the Code, although considers that it is not necessary for the firm to be a signatory at this time. This decision is kept under review, and should circumstances necessitate it, we will announce a change.
The companies listed above represent a sample of our holdings and we encourage you to visit the relevant company websites for the latest and most precise information. Their mention here is for illustrative purposes only, to demonstrate our diverse range of investments. Any mention of any company should not be taken as a recommendation or otherwise.
Over the last fifty-plus years of the Fundâs existence, we have invested in many companies across several industries. The companies mentioned above reflect our investments as of 23 April 2021 and are subject to change, anytime and without any announcement or notice, due to corporate activity or general portfolio operation.
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