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
people

Harry Potter actor suffered 'severe flu-like symptoms' on a flight from London to Orlando

Sport
Kim Sears is reported to have directed abuse at Berdych
tennis
News
news

Rap music mogul accused of running two men over in his truck

News
Gywneth Paltrow proposed that women seek out a special herbal steam-treatment service
news
PROMOTED VIDEO
News
Toronto tops the charts across a range of indexes
news

World cities ranked in terms of safety, food security and 'liveability'

Voices
A mother and her child
voices
Arts and Entertainment
tv

First full-length look is finally here

Voices
The veterans Mark Hayward, Hugh Thompson and Sean Staines (back) with Grayson Perry (front left) and Evgeny Lebedev
charity appealMaverick artist Grayson Perry backs our campaign
News
Tax now accounts for ‘nearly 80%’ of the price of a bottle of whisky
news

Arts and Entertainment
Peppa Pig wearing her golden boots
film

"Oink! Oink! Hee hee hee!" First interview with the big-screen star

Life and Style
tech

Biohacking group hopes technology will lead people to think about even more dystopian uses

Arts and Entertainment
film
Life and Style
life
Arts and Entertainment
Film director Martin Scorsese
film
News
news

The party's potential nominations read like a high school race for student body president

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

    Ashdown Group: Product Manager - (Product Marketing, Financial Services)

    £30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

    Recruitment Genius: Compliance Assistant

    £13000 per annum: Recruitment Genius: This Pension Specialist was established ...

    Ashdown Group: Market Research Executive

    £23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

    Recruitment Genius: Technical Report Writer

    £25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

    Day In a Page

    Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

    Isis hostage crisis

    The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
    Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

    The runaway buccaneers and the ship full of gold

    Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Maverick artist Grayson Perry backs our campaign
    Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

    Assisted Dying Bill: 'I want control of my life'

    This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
    Move over, kale - cabbage is the new rising star

    Cabbage is king again

    Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
    11 best winter skin treats

    Give your moisturiser a helping hand: 11 best winter skin treats

    Get an extra boost of nourishment from one of these hard-working products
    Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

    Paul Scholes column

    The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
    Frank Warren column: No cigar, but pots of money: here come the Cubans

    Frank Warren's Ringside

    No cigar, but pots of money: here come the Cubans
    Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

    Isis stands strong as its numerous enemies fail to find a common plan to defeat it

    The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

    Virtual reality: Seeing is believing

    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
    Homeless Veterans appeal: MP says Coalition ‘not doing enough’

    Homeless Veterans appeal

    MP says Coalition ‘not doing enough’ to help
    Larry David, Steve Coogan and other comedians share stories of depression in new documentary

    Comedians share stories of depression

    The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
    Has The Archers lost the plot with it's spicy storylines?

    Has The Archers lost the plot?

    A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
    English Heritage adds 14 post-war office buildings to its protected lists

    14 office buildings added to protected lists

    Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Scientists unearthed the cranial fragments from Manot Cave in West Galilee