Lyon confirmed that he has owned Unilever shares since 2004, The shares of the consumer goods giant have been sluggish performers over the past year, as many market participants take the view that Unilever is a ‘bond proxy’, and such stocks are now out of favour.
‘Bond proxies’ are companies that are viewed as having limited organic growth prospects but have a durability of income that means they tend to move inversely to bond yields.
As the yields on US and UK government bonds have shifted upwards in recent months, Unilever’s share price has suffered.
Lyon takes the view that those who dismiss Unilever as a mere bond proxy are talking ‘claptrap.’
He commented that, Unilever’s 2016 growth..disappointed market expectations. Rather than dwell on the minutiae of missed quarterly basis points here and there, we had productive meeting with the company chief executive Paul Polman. Unilever is investing in new categories and retail categories as the company looks to secure sustainable growth and remain relevant in the years ahead.’
He continued, ‘In an environment where investors clamour for stocks that will directly and immediately benefit from President Trump’s tweets, Unilever is dismissed as a mere ‘bond proxy’ this is claptrap.’
Lyon added that since he first purchased the shares in 2004, they have trebled. He added that comparison’s with bonds are otiose, as the book cost of a bond doesn’t go up.’
He concluded his comments on Unilever by confirming that he has been buying more shares in the company in recent weeks, and now has a stake of close to £130 million.
Lyon is less keen on the investment case for stocks that provide ‘life’s little luxuries’ and cited disappointing results from Proctor and Gamble and Colgate Palmolive as examples of this.
The Troy Trojan fund has returned 87 per cent over the past ten years.