Brunswick (BC US) US$75.23

Brunswick is the biggest recreational boating company in the world owning brands like Mercury, Bostan Whaler & Bayliner to mention just a few, however, their reach is significant ranging from propulsion to finance & insurance. We bought BC US about a year ago and the stock has declined since with the position sitting on a ~28% paper loss which begs the question, what should MM do? There are two competing factors at play here, as interest rates rise, consumers have less free cash to spend on discretionary items such as boats, however, rising rates are also positive for the ‘value’ end of town and BC trades on just 7x Est 2022 earnings. Earnings expectations have held up while the market has arguably gotten ahead of the likely impact of rate rises by selling the stock off over the last 12 months. We suspect this could well be a case of sell the rumour, buy the fact, with Brunswick being a very high-quality operator.