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‘Adapt and survive’ rings true for AAA-rated Robinson

‘Adapt and survive’ rings true for AAA-rated Robinson

David Robinson has long-term stock-picking at the heart of his $847.4 million (€718 million) Melchior Selected Trust European Opportunities fund and this approach has served him well for almost a decade.

The Citywire AAA-rated manager also believes in backing a company for the long haul. ‘We are a predominantly bottom-up stock-picking fund.

‘We have about 60 companies and try and find businesses which have above average earnings growth at attractive valuations with good prospects for capital appreciation over the next three years.

‘Our average holding period is more than three years. I don’t rotate the portfolio around aggressively and I don’t swing in and out of sectors or styles,’ Robinson says.

The manager likes quality businesses that can withstand political or economic changes and he also favours companies that are capable of helping themselves improve through diversification and restructuring.

One such company is Fluidra, a Spanish firm which makes equipment for swimming pools, which was hurt during the financial crisis as it was exposed to recession in Southern Europe.

Robinson currently holds around 1.7% of his fund exposed to the company and this is part of an 8.4% overall allocation to Spain.

‘Property volumes collapsed and therefore the construction of new swimming pools. You saw a lot of their clients going out of business. That was a very difficult time for them,’ Robinson says.

‘They restructured the business and diversified it by expanding into places in the southern hemisphere like Australia, Latin America and South Africa so they could benefit from the summer season in this region when there was nothing going on in Europe. They are coming out of that phase more efficient and diversified and there is quite an upswing.’

Robinson says that the company was continually improving its margins and benefitting from the rise of Airbnb, as holiday makers were attracted to well-maintained pools.

Staying vigilant

Commenting on the macro outlook for Europe, Robinson says that, despite nearing the end of the election cycle political risk had not disappeared.

‘All three of the major elections have favoured the status quo. Macron was an outsider, but he is very much an establishment figure at the same time.

‘If you see what the far right did in Germany and what has happened in Catalonia, there are signs that below the surface the political plates are moving. Political risk has abated, but it hasn’t gone away.

‘We have seen in the UK how unpredictable politics can be. We have elections in Italy next year, I think it is still a risk factor you have to be aware of. If the economy continues to improve there will be less risk, but if things start to slow down again, then I think political uncertainty will increase,’ he says.

This interview originally appeared in the November edition of Citywire Selector's Euro Stars publication.

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