My portfolio’s currently hurting, but today’s sell-off doesn’t meet the definition of a stock market crash. The FTSE 100’s ‘only’ down 2.43%. At least so far.
It could still meet the definition of a crash by falling 10% in total as volatility sweeps global markets. That will hurt even more, but I won’t panic. Instead, I’ll treat this as a buying opportunity.
Right now, three longstanding targets are at the top of my Buy list, namely equipment rental specialist Ashtead Group, oil giant BP, and private equity specialist Intermediate Capital Group.
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Yet I can see buying opportunities everywhere I look, and I’d love to snap up these two as well, once I scrape enough cash together.
Fund manager Schroders
Family-controlled fund manager Schroders (LSE: SDR) was always going to take a beating today (5 August). To my surprise, it’s only dropped a relatively modest 4.35%. A dozen FTSE 100 stocks have been hit harder. Of course, that may be because it swallowed its medicine last week.
Schroders’ share price plunged on 1 August after posting a 7.7% drop in half-year operating profits to £315m. That was partly due to a £17.8m reduction in performance fees and net carried interest.
Yet there was good news in there too, with assets under management jumping 6.55% to a record £773.7bn. Its fund managers were performing significantly better too.
Schroders’ a long-term underperformer. Its shares are down 22.65% over one year and a brutal 45.03% over three. However, this leaves the shares looking great value at 14.02 times trailing earnings, while driving the yield to a bumper 6.48%.
I view this as an opportunity to buy Schroders at an even lower price with the aim of generating both income and growth when it recovers. However, I suspect we’re likely to see a fair bit of volatility first.
Scottish Mortgage Investment Trust
The Scottish Mortgage Investment Trust’s taking a notably bigger beating, down 6.76% today. Given its focus on the riskier end of the investment spectrum, notably tech stocks and smaller unquoted companies, it’s always vulnerable on days like these.
Before recent events, lead fund manager Tom Slater was making a decent fist of replacing retired star manager James Anderson. The Scottish Mortgage share price is still up 15.48% over one year. I’d love to take advantage of the recent pullback to buy more, but I’m under no illusions.
There will be plenty of bumps along the way. Especially given that US-listed chipmaker Nvidia’s its biggest holding, worth almost 10% of the entire portfolio. I’m surprised the trust hasn’t done better to be honest, given its outsize stake in the number one AI play. Now Nvidia’s on the frontline of the current crash.
I suspect both Schroders and Scottish Mortgage have got a fair bit further to fall as the panic extends. However, markets could snap back if the US Federal Reserve speeds up interest rate cuts. These two might then lead the table of FTSE 100 risers instead.
I’ll be watching the market like a hawk, and swoop when I reckon the worst is over. Then I’ll hold for the long, long term, no matter how many stock market crashes we go through. History shows that shares always recover in the end.
