During the second quarter BlackRock UK Specials Situations Fund added to its position in FTSE 250 listed engineer Senior. This is an international manufacturing company which provides engineering products to the aerospace and defence industry.
"We have held the position in the fund for several years and have been adding to it recently as it is one of our favoured core mid cap holdings," says Richard Plackett, manager of BlackRock UK Special Situations Fund."We have been raising the mid cap exposure and investing inflows. Senior has managed to ramp up profits despite the fact we are in a difficult environment."
Senior reported a 20 per cent rise in profit before tax over the first six months of this year and due to this and future prospects, increased its interim dividend 20 per cent to 1.38p per share. It is an IC buy tip (read our latest update).
Mr Plackett adds that the company meets all of BlackRock's stock selection criteria:
• a strong market position with long term order books and visible revenue streams;
• good stable management;
• a long-term track record in posting consistent growth in profits;
• a strong balance sheet; and
• cash flow to fund organic growth and allow bolt on complimentary acquisitions.
"This is the type of company we want to invest in: the highest quality we can find to survive in a difficult world," he says. "We will continue to maintain our focus on high quality, international companies with an emphasis on strong balance sheets to ensure they can withstand any further period of global economic weakness arising from the issues in the Eurozone. Volatility is likely to remain high given the continuing issues in this region, but equity valuations look attractive relative to other assets."
