JANA's Global Equities Research Team – Overseas Research Trip Report November 2022

In October 2022, JANA’s Matt Gadsden, Head of Global Equities and Justin Tay, Senior Consultant, conducted a global research trip where they visited Copenhagen, London, Edinburgh, New York, Boston, Denver and Los Angeles. This article shares their key takeaways from the trip.

Long-term themes. These include resource scarcity, geopolitical dynamics and productivity gains as the key driver of future growth. There will be winners and losers as these themes play out, but in aggregate, indicate lower prospective returns for growth assets relative to the post-GFC period.

Climate Transition/Impact Research. Finalising due diligence on two strategies adopting varying approaches (concentrated high growth vs top-down, benchmark aware) that can cover a range of client applications. Importantly, these strategies are underpinned by teams with strong investment pedigree in addition to thoughtful frameworks for measuring impact from a listed equities perspective.

Capital Markets Research. Reaffirmation of JANA’s prior recommendation of “balance” with an overweight to “Quality” that will prove more resilient amidst heightened economic uncertainty and emerge stronger. China/EM – sentiment is very negative (economics, geopolitics) with a recovery contingent on clarity around the end of the Zero-COVID policy and incrementally positive macro news flow. Valuations are very cheap and there is an opportunity for long-term investors, but given tail risks, it needs to be sized appropriately.

Investment Manager Psychology. Prevailing heightened volatility and uncertainty across fundamentals, macro and valuations is as challenging an environment as ever for even the most seasoned investors. Dave Eiswert (T. Rowe Price): “A time when analysts can crumble, senior leaders are undertaking lots of therapy sessions with people”. A time for highly experienced, thoughtful investment managers to add considerable value, reinforcing our advocacy for active management.

Market Psychology. Veteran investor Howard Marks’ believes investor psychology matters more to investing today than historically. Today, the world is a smarter place, there is much more information and greater interconnectivity. Although structural inefficiency is gone, cyclical inefficiency is still present as evidenced by the marked shift in investor psychology from 18 months ago to today. Marks’ recent memo, ‘The Illusion-of-knowledge’, emphasised the unreliability of economic forecasts.

For more information please reach out to your JANA consultant.