Supply chain issues will pass

THE issues facing the world internationally re- garding supply chain de- lays and high prices will pass, according to Peter Arender, Chief Investment Officer, Fortress Fund Managers.
Arender explained that world wide there was so much demand for various commodities that the limit of supply has been over- whelmed. However he stated that their view was that these movements in prices are probably short term, and were due to short term shortages. Reassuring investors, Arender, who was speak- ing during the most recent
Fortress Fund Managers Lunch and Learn press briefing, also outlined that Fortress made wise deci- sions regarding which companies to invest in, so the supply chain issues are not significantly af- fecting investment.
"We are looking at owning shares in companies that are durably prof- itable, growing for the long term, responsibly capitalized and where we can buy the shares at rea- sonable prices and hold them for a long time." he said.
Using the fall in oil prices in 2020 as a reference, the chief investment officer offered the argument that the supply chain problems were similar to the noise created by oil.
"I would suggest when we look at what was going on with oil markets, oil futures markets last summer, whereas many of you may recall that the futures price of oil famously went negative for one month," he said. "I would say our base case here is just like last summer looking through the noise of negative oil prices. I would look through a lot of this noise right now."

Arender also highlighted that many companies were realising the true pricing power which they had and now, prices were being raised in response to their own costs going up.
"They have possibly underestimated it and it might be the case that companies are going to be able to protect these healthy margins for some time. So we are seeing company after company, in many cases, raise their prices and still the de- mand is there so we will see how long that lasts," said Arender. The investment officer again explained that there was a need to look past the short term noise to long term goals, saying that it was one of the reasons why Fortress Find Managers had been able to improve and grow over the last 25 years. (AS)