Fund manager Wilson Asset Management (WAM) has explained why the IPH Ltd (ASX: IPH) share price outperformed in June and why the S&P/ASX 200 Index (ASX: XJO) share could keep performing from here.
WAM runs a number of different listed investment companies (LICs) including WAM Leaders Ltd (ASX: WLE), WAM Capital Limited (ASX: WAM) and WAM Research Limited (ASX: WAX).
IPH is, or was, in the WAM Research and WAM Capital portfolios at the end of June 2022. It was in the top 20 holdings.
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What is IPH?
The fund manager described IPH as Asia Pacific's leading intellectual property services group, comprising a network of member businesses, servicing more than 25 countries.
Recent performance
The IPH share price has risen by around 15% since mid-June.
WAM noted that in June, the business didn't release any "fundamental" news to explain the strong rebound of IPH shares
The fund manager explained the bounce of the legal outfit's shares may have been due to currency tailwinds because IPH invoices the vast majority of its clients in US dollars.
While the IPH share price went up, the global share market declined in June after, according to WAM, news of continued interest rate rises and rising inflation, and sentiment gravitated towards businesses with more "resilient earnings profiles" that have "historically proven themselves capable of delivering organic growth in tougher economic environments."
In other words, IPH's defensive earnings and business model could lead to good performance during this difficult period.
Latest IPH update
IPH wants to deliver growth in a number of ways including organic growth, acquisitions and expanding service offerings to clients in Australia and New Zealand.
The ASX 200 share said that the scale of its business enables it to look further at intellectual property adjacent opportunities. It has a "strong balance sheet and capacity" to go after opportunities.
In a recent investor presentation, the business said that "global IP trends remain supportive for IP protection" and that it's well placed to capitalise on these trends.
It also said that it has "demonstrated consistent earnings and cash flow generation to underpin returns to shareholders." The business has been steadily growing its ordinary dividend over the past several years.
IPH share price snapshot
Over the last six and twelve months, IPH shares are virtually flat.
