Interactive Investor

The latest 4% share price rally to 4,232p is a far cry from the mood of shareholders after Unilever's previous update less than three months ago, when the Hellmann's, Ben & Jerry's and Domestos company disappointed with slower fourth quarter sales growth of 3.5%. The new financial year has opened with a robust quarterly rise of 5.7%, a figure better than the 3.9% forecast in the City and driven by a jump of 9.8% in the foods and refreshment division. It also announced plans to buy back its shares for the first time since 2018.

Most investments have a history in the market. In the first in a new series of articles, investment expert Julian Hofmann explains what you must do to assess how well a company, fund or trust has done in the past, and how this performance might be relevant to the investment case now.

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Adapt or die    

The first point to bear in mind is that longevity does not guarantee long-term success. A royal warrant and a brass name plate on a smart corporate address means very little in the context of the market. It only takes indifferent management, changing markets and technologies, or a full-blown crisis to destroy the most illustrious of companies, or derail an entire investment fund strategy. 

Change is inevitable in any context and those that can manage that process will survive and prosper. Those who don’t will fade and disappear.  

But Shell’s strength in lower carbon liquefied natural gas, given its previous acquisition of BG Group, should not be forgotten. Last year’s decision to rebase the dividend is now freeing up cash to help tackle debt, with share buybacks potentially on the horizon. A progressive dividend policy is now being pursued, while a historic dividend yield of over 3.5% is still not derisory in a world of ultra-low interest rates.

In all, and with analysts estimating a fair value price of over £17, market consensus opinion is highly favourable in tone, pointing towards a ‘strong buy.’

A recent note from Winterflood explains that there was a point last year, as the coronavirus pandemic gripped the country, when it seemed the sector might be as severely knocked back as it was by the global financial crisis of 2008 (when average share prices for listed private equity trusts fell 65%).

This did not play out. Levels of investment activity held up, particularly in the second half of 2020. High-profile areas such as healthcare and technology especially attracted investment, but as Winterflood reports, “even in general, it was clear that lockdowns did not hamper the industry’s ability to do deals last year”. 

This did not play out. Levels of investment activity held up, particularly in the second half of 2020. High-profile areas such as healthcare and technology especially attracted investment, but as Winterflood reports, “even in general, it was clear that lockdowns did not hamper the industry’s ability to do deals last year”. 

This did not play out. Levels of investment activity held up, particularly in the second half of 2020. High-profile areas such as healthcare and technology especially attracted investment, but as Winterflood reports, “even in general, it was clear that lockdowns did not hamper the industry’s ability to do deals last year”. 

This did not play out. Levels of investment activity held up, particularly in the second half of 2020. High-profile areas such as healthcare and technology especially attracted investment, but as Winterflood reports, “even in general, it was clear that lockdowns did not hamper the industry’s ability to do deals last year”. 

This did not play out. Levels of investment activity held up, particularly in the second half of 2020. High-profile areas such as healthcare and technology especially attracted investment, but as Winterflood reports, “even in general, it was clear that lockdowns did not hamper the industry’s ability to do deals last year”.