Your Quality Shares Portfolio – investor zone

Dear Investor,

Thank you for choosing to invest in the Quality Shares Portfolio. 

I promised I would tell you where I have invested and why, with no fluff and no jargon. 

In keeping with that, I have prepared a full list of all the companies in the portfolio with notes on why they are there and how they score against four crucial criteria in my investment checklist: resilience, moat, cash and culture.

This information is only for investors like you – may I please ask you don’t share with anybody else.

Please have a look at the portfolio – I hope you like what you see, although, of course, the proof will be in the pudding. If you have any questions, just drop me an email, I always reply personally. 

Thank you again for investing,

Portfolio breakdown by sector

Full list of portfolio companies

Below is the full list of portfolio companies in alphabetical order. You can see the whole portfolio at a glance and click to drill down into each company. 

Ametek owns a set of high-quality businesses manufacturing electronic instruments and electromechanical devices. From fans and blowers for the military and aerospace industries to stent and laser contract manufacturing for the medical industry, each business has a strong position across a diverse range of industrial niches. The margins and growth prospects of these businesses have improved over time, through innovation and relentless operational execution. In addition, Ametek has bolstered the quality and growth prospects of its portfolio through highly selective bolt-on acquisitions. It’s a better business than 10 years ago, in my opinion – and I believe the same is likely to be true a decade from now.   

Why I like Ametek

Remember school dinners: a stodgy sponge pudding, served with lashings of cold, thick custard – if you were lucky? Thankfully, the world has moved on. Nowadays, schools are more likely to outsource catering to the professionals. Hospitals, care homes and businesses are following the same trend. This is good news for Compass, the world’s largest contract caterer, serving 5.5 billion meals a year in 40 countries. Its size gives it considerable advantages – yet it still commands less than a 15% share of a c. $300 billion market. This suggests to me there is ample room for further growth.

Why I like Compass

Think of a chemicals manufacturer and you probably picture large refineries, smoking chimneys, and the odd industrial spill. Croda is different. Its chemicals come in test tubes and go into skin creams and drug delivery systems. In fact, Croda’s chemicals played a key role in the Pfizer Covid-19 vaccine. I believe Croda’s best days are ahead, with its vaccine success potentially spawning a rich seam of opportunities.

Why I like Croda

In the California gold rush, it wasn’t the gold miners who made the most money. It was the companies supplying the picks and shovels. By providing the equipment to research and create biological drugs, Danaher has positioned itself as the picks and shovels provider to the medical science industry. Demand for these therapies is exploding, but picking winners isn’t easy. Danaher’s broad product portfolio means it could be well positioned to benefit, without bearing the risk of drug development.

Why I like Danaher

Consumer tastes and preferences can be fickle, but Diageo’s brands have stood the test of time. Guinness originates from the 18th century, while Johnnie Walker Scotch Whisky is over 200 years old. The heritage associated with many of Diageo’s brands is immensely valuable and difficult to replicate, while its global footprint means they can be enjoyed far and wide. With premium spirits taking a greater share of consumer spending, Diageo looks well positioned to capitalise.  

Why I like Diageo

Have you ever paid attention to those big Caterpillar machines on construction sites? They cost hundreds of thousands of pounds and, if they break, work grinds to a halt. Diploma supplies components to repair those machines and that’s just one small part of its business, patiently built up through two decades of shrewd acquisitions. Diploma focuses on delivering low-cost but critical products, with each acquisition further diversifying the portfolio and entrenching its niche market positions.

Why I like Diploma

If you’ve applied for a mortgage, bought a car, took out insurance, or even just shopped online, you likely – but perhaps unknowingly – crossed paths with Experian. It is the world’s largest credit bureau – it has extensive data on you and me, from our loan and credit card payments to bank accounts. This data is used by businesses in lending decisions, to verify online purchases and combat fraud. With more data guiding more decisions, the uses for Experian’s solutions are expanding all the time, providing no shortage of opportunities.

Why I like Experian

If you eat chocolate, it quite possibly passed through an Idex pump at the factory. And if you were ever in a car accident, emergency workers may have used one of Idex’s rescue tools to save your life. Products like these make up Idex’s unique and diverse portfolio of highly engineered solutions. Combined with an entrepreneurial culture embracing agility, autonomy and customer intimacy, it adds up to a powerful mix, in my opinion.

Why I like Idex

Technology trends can change fast, and many former tech darlings – like Kodak and Nokia - ended up losing relevance. Microsoft’s business model has stood the test of time. From its cloud computing platform (Azure) to Windows and Office 365 – its products and services remain critical. A key reason Microsoft has endured, while many other  tech firms have withered, is the power of its distribution network and dominant market positions, in my view. These same characteristics also leave Microsoft well placed to exploit new technological trends, like artificial intelligence, which is opening up a number of exciting growth opportunities. 

Why I like Microsoft

With over $10 trillion in assets benchmarked to more than 250,000 of its indexes, MSCI commands an unrivalled position in financial markets. I find it very hard to see that changing – after all, any investment manager wanting to track the performance of world equities has little option but to pay MSCI for the privilege. MSCI is also a leading supplier of sustainability and climate data, which is being used in an increasing number of investing strategies and is driving a rich vein of opportunities.

Why I like MSCI

How can a car insurer give you an accurate quote in an instant? The answer is data, and lots of it. RELX is a leading provider of such data – 98 of the top 100 personal insurance companies rely on it. Many other professionals, from lawyers to academics, also depend on RELX’s data every day to make critical decisions. As the data revolution takes hold, RELX could be well placed to capitalise.

Why I like RELX

I see Roper like a fine wine collector that focuses only on the best vintages. But instead of wine, it acquires niche software and technology businesses – from school administration software to wireless sensor networks – and provides an environment where they can flourish. Over time, I expect Roper to use the cash flow from these businesses to add more high-quality companies to its collection.

Why I like Roper

The average modern car has about 1,500 chips, used to control anything from emissions to driver assist systems. In electric cars, the number of chips is closer to 3,000. In fact, wherever you look, from personal electronics to industrial appliances, more chips are being used. Texas Instruments – the ‘Amazon’ of analog chips – looks uniquely placed to me to exploit these trends. With compelling competitive advantages and an exceptionally broad product portfolio, I believe it is very well placed to benefit from the chip revolution. 

Why I like Texas Instruments

The great thing about niches is you're very unlikely to get a Google or Amazon coming along with a new solution to enter the market. It simply isn’t worth their effort. The software businesses Topicus owns are about as niche as they come, with each specifically focused on developing software for a particular industry, from education to healthcare. Added to this is a tried and tested approach to acquisitions, honed by parent company Constellation Software over decades. Topicus was spun out of Constellation Software in 2021.

Why I like Topicus

They say there are two certainties in life: death and taxes. Wolters Kluwer deals with both. Over a million accountants and lawyers rely on its software, while millions of clinicians across the globe use its information and tools to diagnose and treat diseases. Wolters also offers governance, risk and compliance solutions to help with things like regulatory reporting – not exciting admittedly, but if there is a third certainty in life it’s probably increased regulation. To my mind, that’s a pretty good recipe for resilience.

Why I like Wolters Kluwer

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