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James Kinghorn

Dr Jekyll and Mr Hyde

By James Kinghorn
1 minute read

When economies around the world perform well it’s relatively easy for companies to look after the interests of stakeholders, as has been the case in recent years. However, it is far more challenging when times are tough.

Robert Louis Stevenson’s novel The Strange Case of Dr Jekyll and Mr Hyde is a good analogy. The current COVID-19 crisis will throw a spotlight on those companies that behave like Dr Jekyll and stand by their values, and those that become a Mr Hyde, turning their back on all things ESG as the crisis unfolds. We are already seeing signs of this and the crisis will test companies like never before. 

The vast majority of listed companies outline their values in their ESG and sustainability reports. This information is important for helping investors understand the values of the companies they invest in and how well they look after their employees, customers, suppliers and communities.

A sustainable business model must look after all stakeholders in good times and bad. The quality of a company goes way beyond just balance sheet strength and profitability. The way companies behave also helps mark them out as long-term winners. Companies that can do the right thing in times of stress are something to be valued. 


We’ve been paying close attention to how our investments have behaved over the last couple of months. Clearly, for the vast majority, sales and profits are under significant stress as demand across most industries has collapsed. 

However, a crisis also provides opportunity. Opportunities to enhance the reputation of the firm and help win market share as the world exits the crisis. Our investments are behaving in the right way, supporting their stakeholders. 

Our stakes

AIA, our Asian life insurer, provided free COVID-19 insurance for millions of customers, employees and representatives across its region. It has donated thousands of items of personal protection equipment, implemented initiatives to expedite approval for all COVID-19 health-related issues, and cancelled deductibles. It has also funded clinics and provided full risk protection policies for employees in many hospitals across the region. 

Progressive Corp, the US auto and home insurer, returned $1 billion in premiums to customers to reflect the fact that most customers aren’t using their vehicle as frequently. It’s providing customers that can’t afford to renew or pay their premium with relief by continuing cover through the period. Agents are being supported with grants, and while the majority of employees can work from home, those that can’t are also being supported. 

Unilever, the global consumer goods firm, donated over €100 million in the form of soap, sanitisers and food. It is also providing €500 million in cash relief to customers and suppliers to help them manage their business through this crisis. And for its employees, Unilever is offering three months of protection to the entire workforce as a result of this disruption. 

Philips, the European health care company donated a range of diagnostic imaging, patient monitoring and respiratory equipment through the Philips Foundation. It’s also provided financial support for the purchase of personal protective equipment in Italy. And while it’s been busy ramping up production of ventilators and continuous positive airway pressure equipment, the company is ensuring fair access to these products to developing countries. 

Future Quality investing is about analysing all aspects of a firm to understand its sustainable competitive advantage and we firmly believe that a company must treat all stakeholders well to sustain this competitive advantage. All good businesses go through challenging periods. The current crisis has, and will, continue to make life very difficult for many companies. How these companies behave is how they will be remembered by their stakeholders. Robert Louis Stevenson is sometimes credited with saying “Life is not a matter of holding good cards, but of playing a poor hand well.” Most companies have been dealt a poor hand in this crisis, how they navigate through this period and the way they conduct themselves will have repercussions for many years. 


The recent market turmoil has presented us with a few opportunities to buy great companies at a great price. A couple of names we’ve invested in recently include Palomar Holdings and Kerry Group. In March, we invested in Palomar Holdings – a US property and casualty insurer. It is an innovative, technology-enabled insurer that target underserved insurance markets in the US, with the majority of sales derived from earthquake insurance. 

The company’s superior IT and data analytics allow it to provide customers with more granular pricing and flexible products than competitors. It has increased its distribution and added new niche lines. It is growing rapidly but generates strong profitability due to its strong underwriting and risk transfer programme. 

We also took a position in Kerry Group, a European food company that’s a leader in specialty ingredients. It is well placed to address the changing consumer trends in food, such as health and wellness, convenience, clean label and sustainability. It has invested heavily in technology, and it’s this proprietary IT infrastructure and integrated solutions platform that gives it a competitive advantage. The company is a large runway of growth providing solutions for packaged food companies around the world.  

Final thought

While we wait patiently for today’s scientists to develop therapies to help treat this new coronavirus, and help alleviate some of the chaos and suffering, there have been numerous experts predicting the unpredictable over the last few weeks with regard to COVID-19. We are not going to add to this noise nor pretend to know when life will return to a new normal. 

What we do know is that at some point in the future governments must allow the population back to work. We know that the global economy has sustained significant damage, and we know that fiscal and monetary policies globally have injected significant amounts of liquidity into the system to help repair this damage. We also know that at some point, the COVID-19 crisis will pass. 

Investing in companies that have sustainable and enduring franchises, management teams with clear and sound strategies and values and strong balance sheets – all at the right price – continues to be a sensible approach to investment management.

James Kinghorn, investment director, global equities, Nikko Asset Management

Dr Jekyll and Mr Hyde

When economies around the world perform well it’s relatively easy for companies to look after the interests of stakeholders, as has been the case in recent years. However, it is far more challenging when times are tough.

James Kinghorn
James Kinghorn
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