I’m a Fund Manager: Why Migo’s Charlotte Cuthbertson Backs Uranium Mining Company and Won’t Touch Bitcoin

Deciding where to put your money right now is not easy.

The stock market is erratic, and real estate prices have fallen in many areas Inflation has decimated people’s savings for more than two years.

You might think that those in the investment management industry would have a better understanding of how to achieve success under current circumstances.

Each month, This is Money tasks a senior fund or investment manager with a number of questions that will require them to go out on a limb.

We want to know where they will invest in the next 10 years and what they will avoid.

We will be questioning our professional investors who want to know the future of inflation, interest rates and the real estate market.

In the Hot Seat: Each month, we task a fund manager with a number of tough questions

In the Hot Seat: Each month, we task a fund manager with a number of tough questions

Among other things, we will ask them for their opinions on gold, Tesla and Bitcoin.

This week we spoke to Charlotte Cuthbertson, co-manager of the Migo Opportunities Trust.

Migo Opportunities Trust invests in discount opportunities in the closed sector where managers believe there is an incentive to extract value.

The trust is able to invest in any geographic area or asset class provided it is held in an investment trust structure.

1. If you could invest in only one company in the next ten years, what would it be?

Charlotte Cuthbertson answers: Bank of Georgia. We own Georgia Capital (CGEO), an institutional investor that holds a significant stake in the bank.

Georgia’s economy is well positioned, benefiting from a growing middle class and rising wealth, allowing residents to begin purchasing goods and services such as private health, auto insurance, and private education, thus boosting the economy and creating a virtuous circle.

This growth stage may remain for many years. The Bank of Georgia is a big beneficiary of this and doesn’t come with any of the legacy banking issues we see in many of our big western banks.

Georgia on my mind: Georgia's economy is in good shape, benefiting from a growing middle class and growing wealth, according to Charlotte Cuthbertson

Georgia on my mind: Georgia’s economy is in good shape, benefiting from a growing middle class and growing wealth, according to Charlotte Cuthbertson

2. What about the next 12 months?

The aftermath of the Fukushima disaster in 2011 saw a sharp decline in uranium prices and a decline in new mine development.

However, the global push to reduce carbon emissions has since revived interest in nuclear energy, and we have reached a point where uranium production now cannot keep up with demand.

This situation has been exacerbated by energy security concerns given the role played by Russia and Kazakhstan in the supply chain, and unrest in Niger, another important producing country, is disrupting uranium supplies to the French energy industry.

Because of these factors, the price of uranium has doubled over the past 12 months, and is widely expected to be forced higher as demand outstrips supply.

We’ve been investing for a while, so we’ve taken advantage of these conditions and turned a profit recently, but we think it remains an attractive sector.

NexGen, a major uranium miner, is well positioned to capitalize on this trend, especially as it is one of the lowest-cost producers.

High Demand: The primary fuel for a nuclear power reactor is uranium - a heavy metal capable of releasing abundant concentrated energy

High Demand: The primary fuel for a nuclear power reactor is uranium, a heavy metal capable of releasing abundant concentrated energy

3. What sector interests you most?

I’m talking about my own book here, of course, but it has to be that way investment fundsWhere great assets can be purchased at great discounts.

Trusts open the doors to exciting and often overlooked asset classes such as shipping, aircraft leasing and infrastructure – areas that are practically off-limits to most open-end funds and individual investors. Many of these themes benefit from long-term structural tailwinds.

Discounts have already begun to narrow since their peak in 2023. We expect this trend to continue, driven by expected interest rate cuts and the growing presence of active investors, such as Saba Capital, putting pressure on boards to take action to close the valuation gap.

We strongly believe that investors will look at this sector today and see it as a golden opportunity to buy discount mutual funds.

Of course, while our enthusiasm is undeniable, there is always a lot of late-night analysis and company meetings before we make an investment decision.

Charlotte Cuthbertson, co-manager of MIGO Opportunities Trust, believes valuations for large-cap US technology stocks are high.

Charlotte Cuthbertson, co-manager of MIGO Opportunities Trust, believes valuations for large-cap US technology stocks are high.

4. What sector will you avoid?

Ratings on Large American technology It feels very full to me.

Maybe this is just wishful thinking, but I hope there is more to the markets than just buying into companies like Microsoft and Nvidia.

5. Which country offers the best value for investors?

The UK is clearly undervalued compared to its developed market peers.

If the continued selling by institutional investors abates, we could see some impressive performance from the UK stock market.

We’ve actually seen a lot of mergers and acquisitions in the past year as private equity buyers start to recognize how down-rated these companies are.

6. Should investors target growth or valuation stocks?

I think there’s always an argument for not exaggerating one way or another.

Great companies can be valuable or growing, and it was clear in 2022-2023 that many people’s portfolios were too far in one direction.

7. Tesla – Will it eventually boom or bust?

Tesla is unlikely to be part of our portfolio at all as we focus on out-of-favor investments with an incentive to improve.

Tesla appears to still be very much in favor, and there’s no doubt that it will remain a dominant player in the electric vehicle market from now on, but that doesn’t mean it should be valued as if it’s the only player in town.

I can’t understand why other car companies can’t be equally competitive with their electric car offerings.

This situation reminds me of India’s Nifty 50 index, where stocks took a generation to actually grow to reach their valuations.

Exaggerated?  Cuthbertson expects Tesla to remain a dominant player in the electric vehicle market going forward, but says it shouldn't.

Exaggerated? Cuthbertson expects Tesla to remain a dominant player in the electric vehicle market going forward, but says it should not be “evaluated as if it is the only player in town.”

8. Scottish Mortgage – Will you buy, hold or sell?

I don’t agree with that Scottish Mortgage It was necessarily unreliable. It did exactly what the manager told you it would do – invest in growing companies with a significant portion of unlisted companies.

All that happened was that the broader macro and market dynamics changed and their investment style was no longer favourable.

This happens to all asset classes at different times. We have a small foothold in Schiehallion (MNTN), a Baillie Gifford trust with a similar growth-focused mandate, but which invests exclusively in private companies.

9. Is the real estate market “as safe as houses” or is it due for a collapse?

The trend is to convert houses into apartments to meet the demand. And when it comes to housing, ultimately there is not enough supply in the UK for everyone who wants a home – and certainly not an affordable home.

It’s the dynamics of supply and demand. There are some areas of the property that will do very well but areas, such as offices for example, may continue to struggle.

Macroeconomic and broader market dynamics have changed, making Scottish mortgage investing no longer favourable, says Charlotte Cuthbertson.

Macroeconomic and broader market dynamics have changed, making Scottish mortgage investing no longer favourable, says Charlotte Cuthbertson.

10. Gold – Should this be part of everyone’s portfolio and why?

Gold is a pretty decent hedge. I don’t have a particularly strong view, but we have seen a lot of money printed over the past decade, and since gold has intrinsic value, it could be useful if the government or the Bank of England lost control of money. Supply and inflation.

11. What about Bitcoin?

Never invest in something you don’t understand. That’s consistent in this camp for me. I don’t know how to calculate the intrinsic value of Bitcoin, so I’ll be clear.

12. Do you think Brexit has cost the average UK investor?

It’s hard to deny that the UK stock market has been in a recession since 2016, but it’s too early to quantify any long-term benefits of Brexit.

Markets hate uncertainty, and realistically, this is what Brexit has looked like for many years, undermining confidence.

13. Will interest rates go back to their lowest levels again?

I believe the era of incredibly low interest rates is over. Most governments, economies and individuals have too much debt for interest rates to rise above recent highs without undermining the entire financial system – but zero or negative interest rates are unlikely to return.

Supply and demand dynamics: There are some areas of property that will do very well, but areas, such as offices for example, may continue to struggle, according to Charlotte Cuthbertson

Supply and demand dynamics: There are some areas of property that will do very well, but areas, such as offices for example, may continue to struggle, according to Charlotte Cuthbertson

14. Do you think inflation is here to stay?

Geopolitical risks are often inflationary, and I believe we are moving into a world that is more volatile and uncertain than the one we have seen over the past two decades.

An inflation rate of 2% is an arbitrary number that does not necessarily create the best performing economies.

As I mentioned above, inflation at slightly higher rates than we’ve seen will help solve the debt problem in the long run as that debt gets inflated.

15. Has the Bank of England done a good job?

Everyone believes they would have done a better job if they were Governors of the Bank of England.

But then I also scream at Six Nations rugby players when they miss a tackle or drop the ball, as if I could do better.

In hindsight, the MPC seemed slow to catch on just how difficult inflation was, but it certainly wasn’t the only one.

Going forward, it will be important to cut interest rates when inflation declines, and overcome a cooling off with economic hyperactivity, especially ahead of the more uncertain environment that comes before any general election.

16. You inherit £100,000 tomorrow. What will you do with the money?

I’m saving to move into a house instead of an apartment, so I’d add to that pot.

My savings are currently 60 per cent invested in various markets, and I also earn some cash interest, which suits my risk appetite and investment time horizon.

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