Investment Strategies

Inflation Pressures Rise, But Not Great Cause For Concern - J Stern & Co

Editorial Staff, 26 July 2021

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“Our performance in recent months has been strong,” Jérôme Stern said. “The firm’s investments were resilient during the COVID pandemic, declining much less than markets and rebounding strongly,” he said. “We were pleased that we were able to weather the storm and deliver great value for our investors.”

A way to think of J Stern & Co, Jérôme Stern, said, is as a “specialist investment manager with a family as its core backer.” It means investors can take comfort from the fact that a large and established family is bought into the strategy of the business,” he said.

“The alignment of investors is key and behind a lot of the success we have had. Private clients have the same exposures as our family,” he said. 

A test of performance in action is the World Stars Global Equity UCITS fund, which is now more than two years old. It holds $170 million of assets and has outperformed markets, in particular being back to outperforming markets after the value/growth rotation that took place earlier in 2021. 

“Our approach is quality and value for the long term. Volatility and sector rotation are opportunities for long-term investors and we were able to buy value last year and growth this year,” Jérôme Stern said. 

“As we look forward to the second half of this year and next year, the elements for a strong recovery from the pandemic are in place, demand is strong and bottlenecks in labour, inputs and raw material will be overcome as supply increases. There will clearly be short-term spikes in inflation, there will be difficult comparisons after the strong growth we will see this year, and there is likely to be market volatility," he said.

“We invest only in quality companies that have strong and sustainable market positions, in good and growing industries, with strong managements and balance sheets so strong as to weather any kind of adversity. The pandemic has shown us how important our definition of quality is,” he said. 

“Value for us is buying companies at prices that allow us to compound at 8 to 10 per cent or more, in some cases much more, per annum. We have a long-term holding period and trade very rarely. We look at investments over five, 10 and 25 years. That is why turnover in the portfolio is low. We usually trade two to three stocks per year in any given portfolio. Some of the stocks we have in portfolios go back to the 1960s,” Jérôme Stern added.

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