Armstrong buys back luxury stocks after sell-off

Ana Armstrong
Ana Armstrong

Armstrong Investment Managers chief executive Ana Armstrong has bought back luxury stocks Richemont and Swatch after they reached attractive valuations.

Armstrong currently holds a luxury basket of goods in her IM Distinction Diversified Real Return and Diversified Dynamic Solution funds, with brands such as Tiffany, Louis Vuitton and BMW appearing alongside Richemont and Swatch.

She explains Richemont and Swatch are two industry leaders in the luxury segment but following strong performance in these stocks she and co-manager Patrick Armstrong removed positions in the middle of May.

Armstrong says: “This was based on concerns valuations were catching up with the strong fundamentals of these companies. We have re-bought both of these positions [last week] following a 10 per cent sell-off, as we believe valuations are now attractive again.”

She adds: “The prices of these stocks are quite volatile and we believe a long bias, but being flexible enough to take profits when valuations get toppy is the best way to play the sector at the moment.

“The market has recurring concerns over slowing Chinese demand. Buying these dips are attractive entry points as we do not expect a hard landing from China, or from the Asian consumer.”

The multi-asset manager says she is optimistic on the prospects for the luxury industry for the coming years and expects the industry to continue to grow at a double-digit rate.

She says: “We like a broad exposure to the luxury segment which includes watches, jewellery, high end automobiles, and designer clothes and accessories.”

Armstrong explains the basket of stocks she holds have selected all have significant exposure to the Asian consumer and are strong brands.

“We expect this segment to continue to grow at a rate much higher than the broader economy, based largely on growth of the emerging affluent consumers in Asia,” she adds.