Setanta Q1 newsletters

Brendan Moran
Monday, April 27, 2020

Global equity markets fell sharply in the second half of Q1 2020 as the coronavirus spread across the globe. Social distancing and coronavirus disruptions to economic activity became pervasive. Measures introduced to contain it caused the global economy to suddenly enter a deep recession.

Crises lead to bailouts and this time is no different. Since this is a public health crisis, the response has been extreme. Fiscal and monetary authorities quickly responded by announcing unprecedented levels of policy support.

Investors are attempting to look through the current recession, anticipating the impact of the policy response and the peak in contagion rates in Europe relatively soon as stricter quarantine measures take effect.

Although share prices have already discounted much of the economic weakness, management have yet to report corporate earnings for the first quarter. Top down earnings estimates have fallen sharply and these will be followed by a reduction in analyst estimates over the forthcoming reporting season.

The Setanta fund commentaries (links below) discuss, among other subjects, the ability of companies to generate revenues, whatever about profit. They consider the issues of solvency,  liquidity and the risk to dividend pay-outs, as companies struggle to survive our self-imposed lockdown on large parts of the economy. They also analyse the principal drivers of fund performance in Q1 2020, review portfolio activity over the quarter and describe the positioning of the funds looking ahead.