BlackRock UK absolute alpha fund co-manager Nick Osborne has sounded a warning over UK consumer stocks.
Speaking to Money Marketing at the Cofunds absolute returns round table last week, Osborne said he is finding short positions in stocks exposed to UK consumers, alongside those companies affected by the eurozone crisis. He said: “We are still cautious about UK consumption.
As a result, companies exposed to UK consumption are unlikely to see many profits. This effect is two-fold, there is a cyclical element in terms of consumption in the UK and it is also about development in terms of online offerings.”
Osborne said companies such as Amazon have challenged traditional retailers as the firm tends to offer a better and cheaper service.
Osborne said he has reduced the £1bn fund’s exposure to the market from over 20 per cent at the start of 2011 to less than 10 per cent now following poor performance last year when the fund fell by 6.85 per cent to December 30. The fund is running a more concentrated portfolio of 96 stocks this year compared with around 120 in the middle of last year.
Whitechurch Securities managing director Gavin Haynes says: “There is a risk when shorting a sector that is trading at such depressed valuations that there will be a sharp bounceback, which could hurt performance.”