Crux's Richard Pease on the folly of the European Union, January 2017

When a European equity fund manager asks you what the Prime Minster said in her much awaited speech on Brexit, you know they aren't kidding when they say they concentrate on individual stock picking and ignore the wider politics.

And that's exactly what happened today, when we met with Richard Pease, manager of Crux European and Crux European Special Situations funds, for a catch-up.

“I'll watch the news this evening,” Richard said. “It interests me on a personal level and also on a professional level, but it won't change how I'm investing.

“Trying to second-guess politics and time macroeconomic calls is very difficult and ugly economics often results in ugly politics. I've never been a big fan of the European Union—it's seems a bit of a folly—but my belief is that good global businesses can handle the politics.

“We'll get through it. I'd like to think we can all be grown ups about it as there really isn't a lot of point in turning nasty. But I'll concede there is a lot of fear that other countries will follow suit. It's hard to make a bull case for the euro over the next five years unless the periphery countries exit the EU too, but as there were no pre-nups, I doubt this will happen. The UK does have some cards to play. We are big importers of German cars for starters.”

“From an investment stand-point, I'm actually boyishly excited about some of the stocks we hold in our funds. There has been a scarcity of growth in Europe for a number of years now, but good companies can do good things with capital and make you money even in the toughest of environments. We've seen this over the past decade and I see no reason why this should change.

“The positions I hold in individual stocks are modest – I'm not rolling the dice too much in terms of risk taking. I'm just trying to make sensible calls for the long term. I have a very clever team of people working with me and I'm very positive about the future.

“We'll continue to invest in companies that have high barriers to entry and strong pricing power, that are not highly capital intensive but have a strong cash flow and higher-than-usual dividend yields. We also like businesses whose management have a proven track record and meaningful ownership of the company they run.”