Where the wise put their cash

The financial experts reveal their favourite investments
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The Independent Online
We all have favourite investments, but it is interesting to find out where the paid experts like to invest. It might even teach us the secret of investment success. We spoke to four professionals in different areas of the finance world about their favourites - where they invest their own money.

The fund manager

Jayesh Manek sprang to prominence when for two years running he won a Sunday newspaper's fantasy share competition. As a result the Middlesex pharmacist was given several million pounds to invest on behalf of Sir John Templeton, a multi-millionaire and one of the pioneers of emerging markets investment.

Early this year Mr Manek launched his own unit trust, the Manek Growth Fund, which attracted more than pounds 50m at launch.

As a pharmacist he was attracted to shares in Macarthy, a Hull company with a wholesale operation and a chain of 160 pharmacies trading under the name of Savory & Moore. "I could see it was an undervalued stock," says Mr Manek. "I was in the same business and saw that investment analysts couldn't see its potential. I know what the goodwill value is in chemist shops (the law prohibits just anyone opening a pharmacy). The company had excellent locations but the management was not so good."

He started buying shares in January 1991 when the share price was 136p each, valuing it at pounds 25m. His reasoning at the time "was that either the management would do something or if not, then the value I placed on the goodwill was pounds 65m - much more than its then market capitalisation".

Then in 1992, a hostile bidder emerged, followed by two other rivals. Eventually, after an Office of Fair Trading inquiry, the company was bought by Lloyds Chemist for pounds 100m in a share swap.

He sold his shares for the equivalent of 430p each. "The profit gave me a lot of pleasure and taught an important lesson. Whatever business you are in, look around and see what is happening on the ground floor. Are any of the companies involved in it getting better? If so, this could give you a buying opportunity ahead of the herd."

Mr Manek's favourite current investment is Parity, a computer company supplying IT personnel. He first bought shares in it in August 1995 when they were 140p and the company was valued at pounds 40m. In a sector where the requirement for highly trained staff appears to be unlimited, he says: "It is a well managed company that has produced results well ahead of expectations and should continue to do so for the foreseeable future. Despite the recent fall in the market, its share price is now around 486p."

The IFA

One of the best-known independent financial advisers is Graham Bates, of Leeds. He has two favourite investments. "The first is a quarter share in a sprawling, 20-bedroom, 17th-century chateau that I bought with three friends a few years ago. It definitely gives me a lot of pleasure and, maybe one day, a lot of profit."

Mr Bates' other favoured investment is Fleming's Chinese Investment Trust. "I have been saying for a number of years that China is the markets with the greatest potential. It's the biggest ever emerging market, and it could be bigger than the US within the next 15 years."

He has been putting money away in the fund using a monthly savings plan he started around year ago. "It's a very high-risk investment in a highly volatile market," he said. The shares have fallen from 80p to around 24p over the past year. "I don't think the downturn will be that prolonged. Meanwhile I am buying lots more units at this low price, which will do well when the upturn eventually comes. Anyway, it is a long-term investment that I think I will allocate to my baby son."

The investment banker

Loughlin Callahan has been the head of Mercury's investment trust arm since he joined Mercury Asset Management, one of the largest investment management houses in the UK, from Warburg just over six years ago. Like Graham Bates, his favourite investment is a place abroad. He has a plot of land in Crete and hopes to build on it.

His second choice is an investment trust from (surprise) his own stable, the pounds 1bn Mercury European Privatisation Fund. "To date, it has shown a good performance record," he says. "It invests in a region that should continue to grow significantly. "

The stockbroker

For the past 23 years Mark Kemp-Gee has been at stockbrokers Greig Middleton. Now chairman of the firm, he has seen it become the largest private client stockbroker in the country. He has three favourite stocks: Shell, Thames Water and European Leisure, which, he says, "represent oil, water and companionship. All are essential for a pleasant, modern day life. What is more, in the current market mood, they are defensive stocks with much growth potential".

He finds Thames the most attractive of the utilities as well as having potential bid hopes.

"Also, it has less exposure to the problem faced by most water companies of cleaning up the beaches and sea shore," he says.

He has always liked Shell. "Now that it has bitten the bullet with its recently announced redundancy programme, I feel that it is quite undervalued."

As for European Leisure, "this represents the boy meets girl" investment. The company runs a chain of discos and theme bars, as well as 75 snooker and pool halls. "With their lively atmosphere they are always going to be places where consumers are going to meet and spend money."

The three companies represent what he sees as a sound investment portfolio.

TONY LYONS

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