The Analyst: Not a celebrity, but a star performer

The BBC website has a rather fun little section called Celebdaq. This is a pseudo stock market that tracks how often a celebrity is mentioned in the media during a given week.

Each celebrity is given a "share price" that rises if they are in the news a lot, but falls when they are out of the limelight. A look at the market movements provides an interesting view of the zeitgeist.

If one were to play a similar game with fund managers, then names like Anthony Bolton and Neil Woodford would have been big risers in recent years. These investment sages are frequently consulted and quoted because everyone wants to know their view of the market. However, they do not have a monopoly on wisdom. There are many highly talented fund managers that you won't see mentioned in the papers as often and it is easy to forget about them. This could be a mistake, as over the long term I would expect them to outperform.

One manager who has been somewhat forgotten is Neil Pegrum from Cazenove. This seems particularly unfair because he is one of the most experienced managers in the UK and has a fantastic track-record. This week, I will attempt to bring him back into the limelight with a look at how he manages his fund: Cazenove UK Dynamic.

Mr Pegrum's style has always been flexible and pragmatic; perhaps this is the reason for his exceptional performance. He is what I call a genuine stock-picker, focusing on the mid- and small-cap area where there is more inefficiency, and where his experience and expertise can be used to the full. The truth of the matter is that, after more than 20 years in the market, he has excellent contacts and has also seen the majority of management.

The team at Cazenove adopt a business cycle approach, where they try to understand how the economic cycle is affecting different sectors and how this relates to individual stocks. Mr Pegrum feels this is useful because it gives him an additional perspective on the themes running in his portfolio. Although he can draw upon the expertise of his colleagues, he is 100 per cent accountable for the fund and (unlike some other Cazenove managers) has the freedom to invest anywhere in the market. The fund can take large positions if he has a high conviction in certain stocks.

The Cazenove UK Dynamic Fund is a concentrated portfolio of 30 to 50 stocks. Of course, this means that it will often be positioned completely differently to the All Share Index, and performance since its launch three years ago has been very strong.

I think what is most impressive about the performance is that Mr Pegrum has avoided the majority of oil and metal stocks. He admits to underestimating the persistence of the bull run in natural resources, but to be fair to him he has made up that lost performance in other areas. Investors should remember that past performance is not a guide to future returns and the value of investments can fall as well as rise.

I believe one stock Mr Pegrum will always be associated with is Micro Focus. It's still his biggest holding, and has been one of the biggest drivers of fund performance. Unfortunately, it has been driving the portfolio in both directions!

Micro Focus is a software company with a strong market position, a high barrier to entry and growing revenues. But when the company first floated on the stock market, management became distracted and took their eyes off the ball. After two profit warnings, the company's share price had nosedived.

However, Mr Pegrum's long experience taught him to take another look at the company rather than panic. A new management team came in and he felt that they could rejuvenate the firm. Mr Pegrum, who was far closer to the business than many others, recognised that there was still huge potential in this company. He was proved correct; the company's share price has more than recovered since then. Indeed, last week it rose 21 per cent on the back of strong results.

Mr Pegrum believes the current market environment suits the true stock-pickers. There is a need to be really careful; in other words, to avoid the losers, particularly some of the more exotic rubbish on AIM. He continues to look for companies with pricing power in a structurally strong sector, with management teams he trusts.

I believe this is just the kind of fund manager investors need managing their money. You can argue endlessly whether larger companies are cheaper than smaller companies (or vice versa), but a genuine stock picker can outperform in any market. I believe Neil Pegrum is one of the best.

Mark Dampier is the head of research at Hargreaves Lansdown, the asset manager, financial adviser and stockbroker. For more information about the funds included in this column, visit www.h-l.co.uk/independent

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

News
i100 In this video, the late actor Leonard Nimoy explains how he decided to use the gesture for his character
News
Robert De Niro has walked off the set of Edge of Darkness
news The Godfather Part II actor has an estimated wealth of over $200m
Arts and Entertainment
Fearne Cotton is leaving Radio 1 after a decade
radio The popular DJ is leaving for 'family and new adventures'
Sport
Robbie Savage will not face a driving ban
football'Mr Marmite' faced the possibility of a 28-day ban
Voices
voices
Life and Style
Nearly half of all young people in middle and high income countries were putting themselves at risk of tinnitus and, in extreme cases, irreversible hearing loss
health Nearly half of all young people in middle and high income countries are at risk of tinnitus
News
It was only when he left his post Tony Blair's director of communications that Alastair Campbell has published books
people The most notorious spin doctor in UK politics has reinvented himself
Arts and Entertainment
arts + ents
Life and Style
fashion
Arts and Entertainment
James Franco and Zachary Quinto in ‘I Am Michael’
filmJustin Kelly's latest film tells the story of a man who 'healed' his homosexuality and turned to God
News
i100
Arts and Entertainment
Public Service Broadcasting are going it alone
music
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: HR Benefits Manager

    £40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

    Recruitment Genius: Office Manager / Financial Services

    £30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

    Jemma Gent: Year End Accountant

    £250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

    Jemma Gent: Management Accountant

    £230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

    Day In a Page

    HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

    Scientists hail daily pill that protects against HIV infection

    Breakthrough in battle against global scourge – but will the NHS pay for it?
    How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

    Time to play God

    Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
    MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

    MacGyver returns, but with a difference

    Handyman hero of classic 1980s TV series to be recast as a woman
    Tunnel renaissance: Why cities are hiding roads down in the ground

    Tunnel renaissance

    Why cities are hiding roads underground
    'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

    Boys to men

    The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
    Crufts 2015: Should foreign dogs be allowed to compete?

    Crufts 2015

    Should foreign dogs be allowed to compete?
    10 best projectors

    How to make your home cinema more cinematic: 10 best projectors

    Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
    Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

    Manchester City vs Barcelona player ratings

    Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
    Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

    Monaco: the making of Wenger

    Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
    Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

    Chris Gayle: The West Indies' enigma

    Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
    In Ukraine a dark world of hybrid warfare and murky loyalties prevails

    In Ukraine a dark world of hybrid warfare

    This war in the shadows has been going on since the fall of Mr Yanukovych
    'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

    Homage or plagiarism?

    'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
    Broadchurch ends as damp squib not even David Tennant can revive

    A damp squib not even David Tennant can revive

    Broadchurch, Series 2 finale, review
    A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

    Inside the mansion of Germany's 'Bishop of Bling'

    A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower