[ THE US VS THE UK ]
All in due time
The phrase “ patient capital ” has been tainted by its association with Neil Woodford ’ s ill-fated investment trust of the same name . Williams notes patient capital doesn ’ t just mean investing on a longterm basis , but having the capacity to invest , “ so you can pull the trigger at the right moment ”.
“ We talk about investing for the long term ,” he says . “ But what is the point of putting money in at the top of the cycle when you ’ re going to get no return ? That ’ s madness . The commercial outcome isn ’ t good , which means the investment return is poor , the employment isn ’ t sustainable and the longterm tax-take and domestic growth aren ’ t there . “ Investing isn ’ t about just doing it with your long-term hat on . It is about holding back until you ’ ve got the green light and capital you can put in at the right stage of the cycle . That has been besmirched by the Woodford outcome , but it is ridiculously important .”
Technical knockout “ We tend to have shorter durationtype investments in the UK , so we get a cash payback quicker , but we don ’ t have as much potential for long-term knockout returns ,” he explains . “ I think shorter duration investment is better , because nobody can tell you what is going to happen in 10 years . “ Ultimately , we want our companies to be sustainable even in difficult circumstances . I think the UK is massively overlooked and its stock market is likely to be one of the best performers over the next 10 to 20 years , partly because there will be a move from long to short duration .” This is a point of view that Penny has some sympathy with , pointing out he sees similarities between the hype around the US market and the dotcom bubble . The boom stage of the late 1990s coincided with the start of his career managing money and he admits he was “ caught up in the enthusiasm ”. “ Sometimes companies get ahead of themselves and I think we ’ re seeing that now , particularly with the valuations on some of the unicorns ,” he warns . “ The history of venture capital is that there are lots of failures . Also , the history of the top- 10 technology stocks over the last 50 or 60 years is they keep changing . “ There are some similarities with what ’ s going on now and the dotcom bubble in the enthusiasm for the internet and themed funds . What happened with the internet boom of course was that humanity ended up better off , but investors didn ’ t make any money .” trustnet . com