Andrew Philip has been investing for over 20 years and looks to take advantage of investment opportunities as they arise.
Andrew, who is a company director working in the property and consultancy sector, has tended to invest in parts of the economy that he knows about. For example he has a number of commercial and residential property investments, and has seen a good return on these over the past 10 years as property prices have increased.
But Andrew, who is in his early 50s, adds: “Over the years I’ve also invested in things I don’t really understand, but this hasn’t always worked out well.”
Alongside from his property holdings Andrew also invests directly in the stock market, holding shares in various ISA accounts with both IG Trading and AJ Bell.
“These shares are in addition to my occupational pensions, and are part of my overall strategy to help build funds for my retirement.
“I have tried to take advantage of some of the good investment opportunities there has been in the last two years, particularly in the wake of the Covid pandemic.”
Andrew says that market volatility often creates opportunities for investors looking to buy out-of-favour sectors or companies. This happened when coronavirus was first identified. As many developed economies started to impose widespread lockdowns, stock markets around the globe tumbled. Within this general sell-off, certain sectors like leisure and travel were particularly badly hit.
Shares in firms like cruise companies plunged, but for investors like Andrew this created opportunities, particularly as he expects many of these companies to recover and thrive again once the worst of the pandemic has passed.
He says: “I have been investing in cruise and transport shares over the last two years, after the market fell. I have concentrated on these sectors as that’s the business I am in so understand it.” This insight he says, helped him to select shares in companies that were best able to weather the initial economic difficulties, and looked well placed to benefit from any recovery in the tourism sector.
Cruising for Recovery
To date this strategy appears to be paying off. Two of his largest holdings have been in Carnival Corporation (CCL) and Royal Caribbean Group (RCL) – the two largest global cruise companies.
Both companies are listed on the New York Stock Exchange and Carnival is also listed in London. Not surprisingly these companies saw the value of their shares plunge in the March sell-off, although there has been a reasonable recovery since.
Royal Caribbean saw its shares price drop from $135 prior to the pandemic to $23. Shares prices have since moved upwards – although they are still some way off their pre-pandemic high, trading at around $86 today. The shares have a fair value of $86.
Morningstar travel analyst Jaime Katz says: “As travel constraints and hesitancy surrounding Covid-19 recedes, consumer behaviour about travel and social distancing continue to return to normal for Royal Caribbean, paving a path to positive profits to the business.” She says virus mitigation tactics could help the company enjoy “modest pricing gains” in the near future.
The picture is similar for Carnival, which runs nine different global brands – including P&O Cruises and Cunard Line – and is the largest global cruise company.
Share prices fell from £35 just before the pandemic to £6 in March 2020, but have since recovered to £15, meaning brave investors who bought at the bottom have made strong returns. However, Morningstar analysts point out that there may be longer term shifts in consumer travel behaviour because of the coronavirus. The shares are trading in 4-star territory, meaning they are still undervalued, according to Morningstar and have a fair value of £19.
Crypto Crash
Not all Andrew’s recent investment have performed as well. He also bought shares in Argo Blockchain (ARB), a cryptocurrency miner.
Shares in this company shot up at the start of 2021, fuelled by the rising value of many cryptocurrencies such as Bitcoin. In the space of about three months the share price rocketed from 14p a share to 282p per share. Since then though it has been a downward trajectory, with shares now priced around the 75p mark.
Andrew says: “Fortunately I only had a very small investment in Argo Blockchain. I am glad it was small as it is now down about 75% on my initial investment. I have learned once again that it pays to stay away from things that you don’t really understand.”
