As we pass through economic forecasts, equity research and market valuations every day, coming across a report that talks about hope and optimism is a rare occurrence. So the latest from Dr Savvas Savouri is a breath of fresh air. To build some background, Dr Savouri manages a UK based Tiger cub, Toscafund Asset Management, which manages several hedge funds. He says in his letter that the gloom and doom projected by politicians and journalists about UK economy can be largely biased and overdone.
One of the defining themes of Dr Savouri’s philosophy can be discerned from his statement that, ” the UK will do well not DESPITE the unpleasant economic events unfolding across Europe but BECAUSE of them.”
He believes that the growth in developing countries and the positive impact it will have on the industrial sector of UK is underestimated. The overdrive in emerging economies increases the demand for industrial goods in UK. Moreover he sees the debt crisis in the rest of the Europe as an opportunity for UK to rise above them. Expanding on this line of argument, his calculations project that UK will overtake Germany as the largest economy of Europe in terms of GDP, population and employment rate by 2050.
The ExodusPoint Partners International Fund returned 0.36% for May, bringing its year-to-date return to 3.31% in a year that's been particularly challenging for most hedge funds, pushing many into the red. Macroeconomic factors continued to weigh on the market, resulting in significant intra-month volatility for May, although risk assets generally ended the month flat. Macro Read More
Dr. Savouri agrees with Lord Heseltine in his recommendation that talent from foreign countries should be allowed easy opportunities in education and work in UK because the country itself does not have the required number of skilled workers in the fields of engineering and science. The recommendation is of course for students who are self financing their education. Both Heseltine and Savouri share the opinion that UK has great potential for growth but the strategy used by the government is misdirected.
Recently, a UK electronic retailer Comet crashed and left a large number of jobs hanging. Media outlets and politicians portrayed the demise of Comet as some flaw in the structure of the UK’s economy. Savouri contends that while Comet was unable to master the internet revolution carried by the likes of Amazon.com, Inc. (NASDAQ:AMZN) and failed to evolve, there are other UK retailers that are weathering the storm and putting up a fight. So the problem is with Comet, not with the system. As Comet crashed, its competitors Curry’s, PC World and Dixons Retail PLC (LON:DXNS) (PINK:DSITY) gained ground. As we actively follow hedge funds, just for information, Dixons Retail PLC (LON:DXNS) (PINK:DSITY) is a short position of Marble Arch Investments, Saemor Capital, Sheffield Asset Management, Southpoint Capital Advisors and FVP Master Fund.
He is also optimistic about the job market, UK has been able to create more jobs in the private sector and self employment numbers have also surged. UK car makers and industrial sector have projected impressive guidance for future and complain about poor workforce, which again supports the earlier suggestion that skill from foreign countries should be welcomed in UK.