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Liontrust Special Situations Fund

February 2022 review

Past performance does not predict future returns. You may get back less than you originally invested. Reference to specific securities is not intended as a recommendation to purchase or sell any investment.

The Liontrust Special Situations Fund returned -3.9%* in February. The FTSE All-Share Index comparator benchmark returned -0.5% and the average return in the IA UK All Companies sector, also a comparator benchmark, was -2.9%.


Developments in Ukraine ensured that top-down considerations were once again the largest factor in driving stockmarket returns, as investors’ focus shifted from macroeconomic to geopolitical analysis.


From the perspective of the Economic Advantage Funds, this meant a continuation of some of the headwinds from last month. ‘Value’ continued to outperform and ‘quality’ to underperform, though to a lesser degree than in January, while sector trends were largely unhelpful. Most notably, overweight positions in technology (-3.4%) and industrials (-3.1%) were sources of negative attribution, as was the underweight to basic materials (+10%). The relatively modest monthly move in the index masked a rather large amount sector dispersion.  


Some of the largest portfolio detractors were again driven by investor sentiment rather than company newsflow. Of those that issued investor updates, John Wood Group (-19%) suffered the heaviest fall. It announced that the preparation of its 2021 results had led it to downgrade the value of Aegis Poland, a legacy Amec Foster Wheeler contract. It will now take an exceptional charge of $100m relating to the project, reflecting a reduced assessment of expected payments from the customer net of legal costs necessary to recover them.


Precision measurement specialist Spectris (-17%) also fell as investors showed some apprehension over a potential £1.8bn acquisition of Oxford Instruments. Spectris announced that it was in discussions regarding a £31 per share offer comprising £19.50 cash and £11.50 in new Spectris shares. Oxford Instruments had indicated that it would recommend a bid at this level, although a formal offer had yet to be made. However, talks were subsequently terminated in early March due to the market volatility created by the geopolitical turmoil.


The slide in Hargreaves Lansdown (-15%) shares reflects half-year results that disappointed relative to expectations, as well as investor nervousness over the announcement of a large investment in growing its digital platform. Although total assets under administration rose 4% to more than £141bn over the period, net new business of £2.3bn was less than half the level of the prior six months. Revenues dropped 3% year-on-year and underlying profit before tax fell 13%, trends which the company attributes to a normalisation of activity levels following an uplift during the earlier stages of the pandemic. To drive the next wave of growth, Hargreaves announced a five-year investment of £175m in its digital and data capabilities, in the expectation of pushing net new business growth towards 10% and improving client retention. For the first two years of the investment period, the company’s special dividend will be suspended.


Of the stronger portfolio performers in February, Clipper Logistics (+32%) was the top riser. It announced its intention to recommend a possible takeover offer from GXO comprising 690p cash and GXO shares worth around 230p for every Clipper share. XPO is a New York-listed contract logistics provider with 2021 revenues of $7.9bn. Shares in Clipper jumped 32% to trade close to the implied offer.


YouGov (+12%) also made ground in February following a short but upbeat trading update issued on 28 January. YouGov now expects results for the year to 31 July to be slightly ahead of its prior guidance. The US and mainland Europe have driven growth in the first six months of its year, with newer products and a focus on subscription sales proving particularly fruitful.


Shares in Bunzl (+7.3%) rose at the end of the month as 2021 results showed a strong recovery in its base business which compensated for the anticipated drop-off in Covid-19 related orders. The distributor of items such as packaging, labels, cleaning and hygiene products reported underlying revenue growth of 3.6%, the result of a 6.3% fall in Covid-19 related orders and a 9.9% increase in the base business. The recovery in the base business was driven by both product cost inflation and increased volumes across all business areas. 


Lastly, there was news of two acquisitions by CareTech (+7.3%), the provider of specialist social care and education services for adults and children. In 2020, the company took its first steps overseas with an acquisition of a 51% stake in AS Group, based in the United Arab Emirates. CareTech believes that the UAE has a significant under-served population need for its services combined with attractive policy dynamics. In February it announced it has invested in two further UAE-based businesses, one a provider of home healthcare and physiotherapy service and the other a provider of physical health consultations and surgical services.


Positive contributors included:

Clipper Logistics (+32%), YouGov (+12%), Caretech (+7.3%), Bunzl (+7.3%) and AstraZeneca (+7.3%).


Negative contributors included:

John Wood Group (-19%), Ideagen (-17%), Spectris (-17%), Hargreaves Lansdown (-15%) and TP ICAP (-15%)


Discrete years’ performance** (%), to previous quarter-end:


Past performance does not predict future returns







Liontrust Special Situations I Inc






FTSE All Share






IA UK All Companies













*Source: Financial Express, as at 28.02.22, total return (net of fees and income reinvested), bid-to-bid, institutional class.


**Source: Financial Express, as at 31.12.21, total return (net of fees and income reinvested), bid-to-bid, primary class.

Understand common financial words and terms See our glossary
Key Risks 
Past performance is not a guide to future performance. The value of an investment and the income generated from it can fall as well as rise and is not guaranteed. You may get back less than you originally invested. The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisable value of the investment, particularly in the short term. Investments should always be considered as long term.
Some of the Funds managed by the Economic Advantage team invest primarily in smaller companies and companies traded on the Alternative Investment Market.  These stocks may be less liquid and the price swings greater than those in, for example, larger companies. 


This is a marketing communication. Before making an investment, you should read the relevant Prospectus and the Key Investor Information Document (KIID), which provide full product details including investment charges and risks. These documents can be obtained, free of charge, from www.liontrust.co.uk or direct from Liontrust. Always research your own investments. If you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances. 
This should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Examples of stocks are provided for general information only to demonstrate our investment philosophy. The investment being promoted is for units in a fund, not directly in the underlying assets. It contains information and analysis that is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content of this document, no representation or warranty, express or implied, is made by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified. It should not be copied, forwarded, reproduced, divulged or otherwise distributed in any form whether by way of fax, email, oral or otherwise, in whole or in part without the express and prior written consent of Liontrust. Always research your own investments and if you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances. 
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