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Even with all the apparently cheap shares on offer following significant sector sell-offs, the Charles Wolfson Charitable Trust has gone straight for the full-priced rack: Next shares.
The trust — for which Next chief executive Lord Simon Wolfson is a trustee — has evidently seen some positive momentum in the sector despite the cost of living crisis impacting consumer spending.
Last week, the trust bought 164,058 Next shares at 6,095p each for a total outlay of £10mn. This is its first investment in the company, while Wolfson holds 1 per cent of Next separately. Given its scale, the deal certainly represents a vote of confidence.
Like most retailers, Next has seen buying behaviour change as shoppers feel the impact of inflation, and its own margins look to be squeezed as higher fuel costs and other pressures are felt along the supply chain. But its share price has held up in recent weeks, climbing 5 per cent in the past month and rebounding from 5,764p to 6,362p a share from mid-July. It is down a fifth year-to-date.
New research from the Office for National Statistics (ONS) said discretionary shopping had dipped in May and was already “well below what it was in February 2020”. The ONS said this kind of “delayable” spending would remain under pressure, with about half of all people surveyed even “buying less food when shopping” as prices go up.
Next has been open about these pressures hitting its bottom line, even giving an 8 per cent estimate for second-half cost inflation, covering the six months to the end of January 2023. So far this financial year, the performance has remained respectable, and earnings per share are forecast at 5 per cent in advance of last year and sales are guided at 18 per cent higher than 2019/2020, the last pre-pandemic year.
Alpha Financial chief executive sells a third of options
The choppiness of financial markets has affected asset managers’ share prices disproportionately as the markets have subsequently tanked. However, there are some niches which don’t necessarily involve managing other people’s money that have seen a clear benefit from the carnage.
One of these is Alpha Financial Markets Consulting, which advises asset managers and wealth funds on ways to protect their fee margins. Events through 2022 go some way towards illustrating the adage that anyone can call themselves a genius when markets are rising, but when heading south you need to call in some real technical knowhow.
All this has meant that times are good for specialist consultants. The strong recovery in Alpha’s share price, which began in March this year, has therefore allowed chief executive Euan Fraser to offload a substantial part of his available securities — over 563,485 were sold at an average price of 400p a share, netting Fraser £2.25mn. He has been with the company since 2013, oversaw its funding rounds and accession to Aim in 2017 and retains just over 1mn shares as part of his ownership package.
Unsurprisingly, the ugly markets, particularly for tech shares, have spurred demand for Alpha’s services and the company registered 30 per cent organic fee growth at its recent set of financial results, allowing the company comfortably to beat consensus profits forecasts for 2022.
The group’s high cash generation is also expected to support future acquisitions in a highly specialist area of the market. Broker Berenberg recently described Alpha as “essential” for its customers and it is therefore regarded as a core expense of doing business for asset managers. The other notable feature is that Alpha seems to be able to cover the entire network from asset managers and pension funds all the way down to distributors and individual investors.
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