Another IMF downgrade would make this year’s growth rate the slowest since the 2009 financial crisis cast the world into recession.
Example: Earnings for Medtronic, a global medical device company, will face minimal impact from global slowdown
Medical device companies are expected to continue growing at close to twice world growth rates – ageing demographics are growing the healthcare sector faster
“The slowdown in the global economy will have relatively minimal impact on the outlook for Medtronic which is benefitting from the powerful megatrend in the growing demand for healthcare products and services and through innovation,” said Monik Kotecha, CIO, Insync Funds Management.
In a low global growth environment, Insync is still finding opportunities in the global healthcare sector.
Whilst global GDP is forecast to grow at around 2-3%, and there are growing concerns around the deleveraging necessary in China and the negative impact the global economy, Insync is finding opportunities in the global healthcare which they forecast to grow at a pace of 2x GDP over the coming years.
In the recent market volatility Insync added to its position in Medtronic, the leading medical device company in the world.
Medtronic is extremely well diversified across different products and geographies and has leadership positions in cardiology, general surgery, vascular, neurology, spine, and diabetes markets.
The company is forecast to generate free cash flow of over $7bn in 2016 and is committed to returning 50% of its free cash flow to shareholders in the form of growing dividends and buybacks.
The slowdown in the global economy will have a relatively minimal impact on the outlook for Medtronic which is benefitting from the powerful megatrend in the growing demand for healthcare products and services and through innovation.
The recent volatility in global markets provided Insync the opportunity to increase it’s holding in Medtronic.
Insync manages a concentrated portfolio of 15-30 exceptional global companies in the Insync Global Titan’s Fund with Medtronic now the Fund’s largest holding. Insync finds the global medical device sector has characteristics it seeks in exceptional businesses:
• including high levels of profitability
• strong free cash generation, and
• strong capital allocation back to shareholders in the form of rising dividends and buybacks
Mr Monik Kotecha CIO Insync
Fund Managers (02) 9216 2977 0413 768 480
Distributed by Chris Hocking Strategies 0418 603 694
Originally published 27 October 2016.
To download as a PDF, click link Medtronic – The downgrading of global growth by the IMF is not hurting all businesses.
Monik Kotecha is the chief investment officer at Insync Fund Managers which invests in highly profitable companies that are benefitting from global megatrends. He has worked in London, New York and Sydney. He spent over 7 years as a Senior Portfolio Manager at Investors Mutual Limited, 5 years with BT Funds Management Limited and 3 years with the Abu Dhabi Investment Authority.
Monik has considerable hedging and currency risk experience.
Insync manages a concentrated, large cap global equity fund incorporating downside protection strategies and active currency management.
The fund is managed conservatively, with an absolute return focus, given that the key to compounding strong long term returns is to minimise drawdowns.
The stocks that Insync focuses on are exceptional global businesses with high returns on invested capital, strong free cash flow generation, solid balance sheets and a track record of returning cash to shareholders through growing dividends and/or share buy-backs.