Ben Yearsley: You'll never get a bum steer from Artemis UK
Saturday 13 August 2011
I am going to avoid writing in detail about the wider markets this week. Events are moving so quickly that as soon as I write something they have moved on! So, for those still venturing into the markets I thought I would highlight a fund manager with an excellent pedigree who is looking to exploit a range of long-term structural growth opportunities. The manager is Tim Steer, and the fund is Artemis UK Growth.
If you turn the clock back to the early part of this century, one of the major themes for financial markets, apart from the bursting of the dotcom bubble, was major accounting scandals and the collapse of companies such as Enron and WorldCom. What is the relevance of bringing up this ignominious stock market history? Quite simply that one of Mr Steer's unique selling points is his passion for dissecting company accounts looking for dubious practices and numbers that don't add up, essentially avoiding Enrons. Indeed, in his hedge fund (sadly not available to retail investors), he shorts companies where he finds evidence of such accounting shenanigans.
One of his most famous triumphs was Connaught, the property management and environmental services group that went into administration in September 2010. Among the questionable practices, he found that its balance sheet recognised profits from activity that had not yet been fully carried out or paid for. As Connaught's financial position deteriorated in the wake of government spending cuts, there was insufficient cashflow to pay suppliers. The company was eventually put into administration, wiping out shareholders.
Needless to say, this was a very profitable trade for Mr Steer and, although shorting is a risky strategy, he needs only a couple of successful shorts each year to add a tremendous amount of value for his investors. With more than 2,000 companies in the UK to choose from, there will always be suspect accounting somewhere. In this retail fund, Mr Steer can go short with up to 10 per cent of the portfolio, and it can really give him an extra source of returns over his rivals in the sector. Plus, for his long positions he actively avoids what he calls "the high cliff-divers of Acapulco" – companies that sail too close to the wind, hoping things will turn out alright.
Although a UK fund, Mr Steer fervently believes this is a global investment with only 29 per cent of the portfolio by revenue exposed to the UK. Quite simply, he is seeing lots of opportunities in Britain that offer inexpensive exposure to the rapid growth of emerging markets. He also believes UK companies generally have the added benefit of good corporate governance and accounting standards, though clearly there are exceptions!
So what sort of companies is Mr Steer looking at? Examples include Devro, a company making sausage skins, and a beneficiary of the increasing consumption of meat Asia, and Aggreko, a firm with significant emerging market exposure providing temporary power generators.
The top holding, Weir Group, is the world's largest manufacturer of pumps for "fraccing" – essentially extracting oil and gas from rock formations. Mr Steer believes many of his holdings are well protected from any global slowdown as they dominate specific niche areas offering strong growth.
To accompany his forensic accounting approach, Mr Steer calls upon his quantitative system built by Stephen Yiu, the assistant manager of the fund. This looks at a variety of company factors including price-to-earnings multiples, earnings growth, share price momentum and technical analysis. Each stock is scored out of 100 and the system is used to search for new ideas, as well as to sense-check existing ones.
At the end of July, the UK market looked good value, based on our analysis. The recent significant falls have made stocks cheaper still to the point that earnings and dividends would have to fall a good deal to justify it. For investors prepared to venture into the markets and hunt for bargains rather than batten down the hatches, I believe this fund represents interesting way to exploit the varied opportunities in the UK market.
Ben Yearsley is an investment manager at Hargreaves Lansdown, the asset manager, financial adviser and stockbroker. For more details about the funds included in this column, visit www.h-l.co.uk/independent
Independent Partners: See how much you could save by switching credit cards. Compare now
food + drinkMichelin-starred Tom Sellers on being this year's hottest property
tvParents (and kids) rejoice! A new wave of fantastic family entertainment is here
booksGeese, gorillas, grandads... and growing up
food + drinkHow one grocery e-tailer is gearing up for the Yuletide rush
food + drink
travelFor broadcaster Mishal Husain, a long-haul Club Med holiday was a chance for her family to explore its sense of 'zen' and 'animation'
- 1 Hundreds arrested as Canadian police smash worldwide paedophile ring
- 2 Sherlock series 3: Benedict Cumberbatch and Martin Freeman provide teasers for the biggest comeback in British television
- 3 Why Barcelona chose Everton to educate their latest prodigy
- 4 Mass murder in the Middle East is funded by our friends the Saudis
- 5 Japan cracks down on leaks after scandal of Fukushima nuclear power plant
- < Previous
- Next >
iJobs Money & Business
£25000 - £50000 per annum + Benefits + Bonus: Harrington Starr: C++ Server Dev...
£300 - £350 per day: Harrington Starr: Leading Electronic Trading Software Ven...
£80000 - £100000 per annum + benefits + bonus: Harrington Starr: Project Manag...
£50000 - £60000 per annum + benefits + bonus: Harrington Starr: Business Analy...
Day In a Page
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.
John Lennon's childhood home in Liverpool to be sold at auction. Guide price: £150,000-£250,000.
A six-bedroom detached period property with secluded gardens, ample parking and a double garage in Rye, £675,000.
A large split-level property with three double-bedrooms and roof terrace, close to Crouch End Broadway, £625,000.
A charming barn conversion in the picturesque Cotswold village of Ilmington with three bedrooms, a detached garage, workshop and beautifully manicured gardens £675,000.
A three-bedroom new build, ground-floor flat with two bathrooms, close to Bermondsey tube, £445,000.
A three-bedroom house in an enviable new development moments from Oxshott High Street, with secluded garden and decked area, £385,000
A two-bedroom split-level flat with stunning south-west facing roof terrace in the popular Brondesbury Conservation Area, £549,950.
A charming 16th century, three-bedroom detached house in Bidborough with picturesque garden